Daniels rallies to aid Indiana Gasification 

click to enlarge House Speaker Brian Bosma, R-Indianapolis, said Thursday that he's been lobbied by Gov. Mitch Daniels to revive a tax credit for a proposed coal-to-gas power plant planned for Rockport. - PHOTO BY LESLEY WEIDENBENER, THESTATEHOUSE FILE.
  • House Speaker Brian Bosma, R-Indianapolis, said Thursday that he's been lobbied by Gov. Mitch Daniels to revive a tax credit for a proposed coal-to-gas power plant planned for Rockport.
  • Photo by Lesley Weidenbener, TheStatehouse File.

By Lesley Weidenbener
The Statehouse File

Gov. Mitch Daniels will use the final week of the 2012 legislative session to push a tax credit that would help finance the operation of a proposed coal-to-gas power plant in Southern Indiana.

Daniels said Friday that the tax credit is important to help Indiana Gasification avoid "wasteful, lengthy litigation" that could delay and ultimately destroy the $2.65 billion project, which is a sort of partnership between the state and developer Leucadia National Corp.

"A lot of great projects get killed just by the delay of litigation," Daniels said. "We've seen this in energy over and over again. And I think there's an intent to try to do that here. They might lose in the end but the project might be wrecked in the process."

At issue is a tax credit that supporters of the project say was always meant to be part of the deal. The credit would reward the Rockport plant for using Indiana coal to make synthetic natural gas. Daniels said Friday that legislation passed by the Senate — but killed by the House — would only have clarified that the plant would qualify for the credit.

But the controversial project is under fire — in court and at the legislature. Evansville-based Vectren Energy and several smaller utility companies have appealed a decision by the Indiana Utility Regulatory Commission to approve a 30-year deal that calls for the state to buy most of the synthetic natural gas produced by the plant.

Under the deal, the state would then sell that product in the natural gas market — and pass along any losses or some of the savings to Indiana customers through their utility companies.

Vectren officials and other opponents argue that the changing natural gas market — primarily the flood of shale gas into the system —has driven prices so low that the deal no longer makes sense. Indiana Gasification is expected to produce synthetic gas for about $6.60 per dekatherm, while natural gas prices are currently below $3.

That's what led House Ways and Means Chairman Jeff Espich, R-Uniondale, to strip the tax credit out of the legislation. And later, House Speaker Brian Bosma, R-Indianapolis, said that he supported the move, which he believed could stop the project.

But after a week of lobbying by the Daniels administration and some additional research on the issue, Bosma said he's softened his position. On Friday, the speaker said he now believes that the natural gas market is likely to fluctuate more than opponents have argued and that he might be willing to support the project and the tax credit.

He said the language is likely to be put back into a bill in the session's closing days.

"We're looking at it to see the direction," Bosma said. "I haven't made a decision yet."

Lesley Weidenbener is managing editor of TheStatehouseFile.com, a news website powered by Franklin College journalism students.

Additional Notes on the governor's plans for this week

By Samm Quinn
The Statehouse File

Gov. Mitch Daniels said Friday he will push the General Assembly to compromise on a smoking ban bill that has as few exemptions in it as possible.

Daniels said he supports the House version of the bill, which bans smoking in virtually all workplaces – including restaurants and taverns – and only includes a few exceptions such as casinos and cigar bars.

But Senate President Pro Tem David Long, R-Fort Wayne, made clear last week that he prefers an exemption for taverns. Without that, the bill seems unlikely to pass.

Daniels said he'll continue to push for a more comprehensive ban.

"We've been talking to legislators every day, but if there are others that are still wavering and I can help, I will," Daniels said. "I'm hopeful that the final blending of those two bills will be a strong one."

Daniels said Friday he also prefers the House version of an automatic taxpayer refund bill, which would likely provide more tax relief to Hoosiers over the long term.

The governor's comments come as the General Assembly tries to work out final compromises on bills in time to go home for the year by March 9. That would be earlier than the March 14 adjournment date set in law.

Daniels said Friday he thinks lawmakers can do it.

The smoking ban and taxpayer refund bills are among many that have landed in conference committees because the House and Senate could not agree on language.

The Senate passed the smoking ban bill last Wednesday with amendments that make it much different from the House's original legislation. Senators added exemptions for taverns, charity gambling events, home-based businesses, nursing homes, and others.

The co-author, Rep. Charlie Brown, D-Gary, said he's not sure what will happen to the bill in the conference committee.

"My preference is to get it back to the form that it left the House," Brown said. "We have to give it a try. I haven't a clue about what will or will not sell at this point."

Daniels is pushing the smoking ban for the first time and said Friday he prefers the House version of the legislation.

"We'd like to see as few exemptions as possible. I think the House bill is a lot better than the Senate bill," he said.

The taxpayer refund bill debate is a little different.

Taxpayers would receive about $50 back from the income taxes they pay this year under a bill the House approved Monday, but questions remain about how the automatic refund program would continue in the future.

Most of the conflicts in the bill deal with how the state will handle surplus revenues starting after June 1. Fiscal leaders are close to an agreement on what to do with some $335 million in excess tax revenue the state is projected to have in its accounts this year.

Daniels said he likes the House's approach, which would make refunds available when the state's surplus exceeds 12 percent of the following year's spending. The Senate version of the bill sets that trigger at 14 percent.

But Daniels said he's pleased fiscal leaders in both chambers have decided to provide refunds on a per-capita basis rather than as a percentage of what an individual has paid in taxes.

"The House version is much better, but both made a real important change for simplicity purposes and also to help lower income taxpayers," he said. "On the distance between them, the House version is better and I hope the final version looks like that."

Samm Quinn is a reporter for the StatehouseFile.com, a news website powered by Franklin College journalism students.

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