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NEWS RELEASE

 Ohio Department of Transportation  Internet News Release
September 10, 2003

STATE OFFICIALS WORK TO INCREASE FEDERAL TRANSPORTATION FUNDS

(COLUMBUS) Ohio Department of Transportation (ODOT) Director Gordon Proctor and Ohio Department of Agriculture Director Fred Dailey today met with Ohio's Congressional Delegation to discuss eliminating the "ethanol penalty," which costs Ohioans about $160 million in federal transportation funds each year. The directors were joined by various transportation stakeholders.

Removing the ethanol penalty is an important component of Gov. Bob Taft's $5 billion Jobs and Progress Plan, which seeks to increase Ohio's federal transportation funding by $250 million annually to create jobs, rebuild aging highways, improve safety and complete rural corridors throughout the state.

"I commend our Congressional Delegation for their interest and understanding of the importance of Ohio's transportation system," said Proctor. "They are working to increase our federal funding levels which is key to our ability to improve the state's highway network."

Increasing Ohio's transportation funding is Gov. Taft's top federal priority. For more than 18 months the governor has been working closely with Ohio's Congressional Delegation to generate support throughout Congress and from other states for an overall increase in federal transportation funding levels.

Proctor told Ohio representatives ethanol, a mixture of corn by-product and gasoline, is taxed at 13 cents a gallon compared to the federal tax on gasoline of 18.4 cents a gallon. For every gallon of ethanol blended fuel sold in Ohio, the state contributes 5.4 cents less to the Highway Trust Fund. In addition, 2.5 cents of the ethanol tax is diverted from the Highway Trust Fund and goes to the Federal General Revenue Fund. Because Ohio's federal transportation funding is based on the state's payments into the highway trust fund, the more ethanol Ohio uses the more revenue it loses.

"The state should be rewarded, not penalized, for using a renewable energy source like ethanol," said Dailey. "Ohio farmers are poised to help provide all the raw stock that's needed for massive ethanol production in the U.S. It's a shame that an antiquated highway funding formula still holds back progress."

While Ohio remains an advocate for ethanol use, its objections focus on how federal formula's distribute ethanol tax revenues. A federal energy bill currently being debated by a joint House and Senate Conference Committee calls for doubling the use of ethanol fuel, but it also eliminates the existing ethanol penalty. The Conference Committee on the Energy Policy Act of 2003 is expected to make final recommendations on the energy bill by the end of September. Ohio Congressmen Paul Gillmor, Bob Ney and Mike Oxley are members of the conference committee.

"We are very fortunate to have Ohio represented on the Energy bill conference committee," said Proctor. "We expect the work of our Congressmen to be beneficial to Ohio."