SB 0760 - Fiscal Note

Fiscal Note - SB 0760 - Economic Development for Agriculture

L.R. NO.  2193-03
BILL NO.  SB 760
SUBJECT:  Economic Development for Agriculture
TYPE:     Original
DATE:     January 30, 1996



                              FISCAL SUMMARY
                    ESTIMATED NET EFFECT ON STATE FUNDS


FUND AFFECTED              FY 1997             FY 1998           FY 1999
General Revenue                 $0           ($60,850)         ($52,204)

Total Estimated
Net Effect on All
State Funds                     $0           ($60,850)         ($52,204)

                   ESTIMATED NET EFFECT ON FEDERAL FUNDS


FUND AFFECTED              FY 1997             FY 1998           FY 1999
None                            $0                  $0                $0

Total Estimated
Net Effect on All
Federal Funds                   $0                  $0                $0

                    ESTIMATED NET EFFECT ON LOCAL FUNDS


FUND AFFECTED              FY 1997             FY 1998           FY 1999
Local Government                $0                  $0                $0



                              FISCAL ANALYSIS

ASSUMPTIONS

The Department of Economic Development, Public Service Commission, Department
of Natural Resources, Department of Revenue, and Department of Highway and
Transportation assumed no fiscal impact from this proposal.

The Department of Agriculture assumed the legislation would clarify the
materials eligible to be used to produce ethanol and remain eligible for
funding from the Ethanol Producers Incentive Fund.  It also clarifies that
eligible ethanol products include industrial uses in addition to fuel
ethanol.  DOA assumes neither the clarification of eligible raw materials or
eligible products would have a fiscal impact.

DOA assumed language limiting the maximum annual liability to $30 million
reduces the state's potential liability.  However, the liability is currently
limited because these payments are subject to appropriation.

DOA assumed they would request one FTE, a program coordinator,  and related
expenses and equipment including an automobile to carry out the information,
assistance and services outlined in the proposal.

The Program Coordinator would work with established and existing resources,
universities, organizations, and markets to provide agricultural producers
information and assistance on cooperative marketing and processing.  The
Program Coordinator would also disseminate information on agricultural
production, processing and marketing.

The DOA assumed this proposal did not completely duplicate any current
programs.  However, similarities exist between this proposal and the
University Extension Service's Commercial Agriculture Program.

Oversight assumes the Program Coordinator will be based out of the DOA
central office and can use an existing fleet vehicle.  Accordingly, Oversight
has not included costs to purchase a vehicle.

FISCAL IMPACT - State Government   FY 1997   FY 1998   FY 1999
                                  (10 Mo.)
GENERAL REVENUE FUND
Costs - DOA
  Personal Service                      $0 ($33,498) ($34,336)
  Fringe Benefits                        0  (10,291)  (10,548)
  Expense and Equipment                  0  (17,061)   (7,320)
Total Costs - DOA                        0 ($60,850) ($52,204)

Net effect on -
GENERAL REVENUE FUND                    $0 ($60,850) ($52,204)



FISCAL IMPACT - Local Government   FY 1997   FY 1998   FY 1999
                                  (10 Mo.)

                                         0         0         0

DESCRIPTION

Ethanol Producer Incentive Fund

Sections 142.028 and 142.029 are repealed and reenacted as they exist in the
state of Minnesota.  Differences from existing law include:  1)  Payments
from the fund shall only be made to producers at plants which are 85% or more
owned by producers of  agricultural products.  2) Production must begin
before June 30, 2000.  3)  Payments are for a ten year period.  Current law
is for a maximum of 60 months.  (4)  The amount of the payments shall be $.20
per gallon of ethanol or anhydrous alcohol regardless of the gallons
produced.  Currently, the payments are $.20 per gallon for the first 12.5
million gallons and $.05 per gallon for the next 12.5 million gallons.  (5)
Ethanol plants which use closed-loop biomass in a cogeneration facility are
eligible for a payment in the amount of $.015 cents for each kilowatt hour of
electricity generated.  Total payments in each fiscal year may not exceed
$750,000 under this provision.  (6)  Total payments to all producers in a
fiscal year may not exceed $30 million, while payments to individual
producers in a fiscal year may not exceed $3 million.

Cooperative Law

Section 274.030 is amended to allow five owners or operators  of a family
farm or a family farm corporation to form a livestock production cooperative.
Section 274.310 requires the Department of Agriculture to provide assistance
to agricultural producers regarding cooperative marketing, cooperative
processing, the development of regional and niche markets and the most modern
information and technology related to agricultural production.
This legislation is not federally mandated, would not duplicate any other
program and would not require additional capital improvements or rental
space.

SOURCES OF INFORMATION

Department of Natural Resources
Department of Agriculture
Department of Revenue
Department of Highways and Transportation
Department of Economic Development - Public Service Commission