Reductions in USDA Funding and Congressional Earmarks to Impact Rural Areas

Rural states should prepare to have fewer federal dollars in their economies.  The Obama administration has proposed cuts in USDA funding and Congress has announced a ban on earmarks, which have historically been a boon to some rural areas.

 

 Download the Excel Version of the Table: "Federal Earmark and Department of Agriculture Expenditures"

The American political landscape has become increasingly focused on the rising national deficit, and the federal government is taking steps to reduce spending. This climate of austerity will have an economic impact on rural areas, which frequently benefit from federal funds.
 
The U.S. Department of Agriculture (USDA) is facing $3.2 billion in cuts for the 2012 fiscal year, lowering the agency’s discretionary spending to $23.9 billion. Congressional Republicans from both houses, as well as President Obama, also have expressed support to end earmarks, resulting in a two-year earmark moratorium. These actions will likely have an economic impact on more rural areas of the country where federal spending can boost economies and quality of life beyond what the market alone would provide.
 
USDA discretionary spending will be cut for fiscal year 2012, with a few priority areas—such as renewable energy—receiving additional funding at the expense of lower-priority areas, like direct payments to high-income farmers. The administration also will adjust certain home ownership programs and focus conservation efforts. State leaders should be mindful of key changes in priorities and funding reductions so they can help their constituents adapt to the changing environment:1
  • The president’s 2012 budget proposes to allocate $6.5billion in financial assistance to electric cooperatives, research institutes and small businesses to assist in the development of renewable energy. This policy preference fits with the Administration’s larger objective of decreasing the country’s dependence on fossil fuels, as well as spurring economic growth in a developing industry.
  • The administration would direct $400 million in financial assistance specifically for biofuels, another indicator of renewable energy’s prominence in the federal agenda. These investments in renewable energy could help bolster rural state economies as they lose federal support in more traditional areas.
  • The administration would also adjust its research funding. The focus would be on human nutrition, obesity reduction, food safety, sustainable bioenergy, global food security and climate change. These priorities would be emphasized at the expense of research grant earmarks. The administration also would cancel the $224 million unobligated balance for research construction projects.
  • The administration proposes merging several programs of the U.S. Forest Service to improve efficiency.
  • The administration would focus its effort on conservation by issuing a $2 million funding increase for the Wetlands Reserve Program and the Environmental Quality Incentives Program.
  • The Supplemental Nutritional Assistance Program, or “Food Stamps” program, would receive 15 percent more funding than 2010 levels.
  • Research spending in 2012 would decrease by 17 percent from 2010 levels.2
  • Marketing and regulatory programs spending would decrease by 5 percent.
  • Funding for the Natural Resources Conservation Service would increase 67 percent from 2010 levels.
  • Rural Housing Service funding would decrease by 46 percent from 2010 levels.
Congressional earmarks also are being eliminated, and they can have an economic ripple effect in rural communities. Some examples:
 
  • A road expansion project in Kentucky’s Christian County is now in jeopardy.3
  • Alaska in 2008 had the lowest population and highest earmark funding per capita. Its earmark per capita in 2010 was less than a third of what it was in 2008.4 Alaska’s federal support is likely to be in even greater jeopardy in 2011.
  • West Virginia’s congressional delegation requested $820 million in earmarks for projects like flood control in coalfields and mine rescue teams, but the state is unlikely to receive it unless it wins funding through grant-making agencies, which also are facing tight budgets.5
The repercussions of the earmarks ban have yet to be fully felt in the states. Prior to the recent climate of austerity, rural states with influential members of Congress were able to secure funding for state and local projects to boost economies. Some of these projects received  intense public scrutiny, such as the $398 million Gravina Island Bridge in Alaska, which became known as the “bridge to nowhere.”6 State leaders may wish to re-evaluate the role federal funding from the USDA and earmarks from their Congressional delegation have traditionally played in supporting more isolated rural economies.
 

References:

2 Huffstutter, P.J. “Obama’s Budget Would Deeply Cut Farm Subsidies.” Los Angeles Times. Feb. 14, 2011.
3 Steinhauer, Jennifer. “Lawmakers’ End of Earmarks Affects Local Programs Large and Small.” Feb. 7, 2011. 
4 Taxpayers for Common Sense. “Complete TCS FY2008 Earmark Database.” 2008. 
Taxpayers for Common Sense. “Complete TCS FY2010 Earmark Database.” 2010. 
5 Taxpayers for Common Sense. “FY 2011 Earmark Request Database.” 
6 The Associated Press. “Alaska: End Sought For ‘Bridge To Nowhere.’” Sept. 22. 2007.