December 11, 2016
 Washington Report - McAllister & Quinn 

​News from the Halls of Congress & The White House
Continuing Resolution Opens Up Funds for USDA Farm Loans
The continuing resolution to fund the federal government released late Dec. 6 grants the USDA more funding to process farm loan applications, just in time for the peak winter and spring lending periods.  The legislation provides funding to the Department of Agriculture up to the rate for operations necessary to fund loans for which applications are approved, allowing the department to meet spikes in loan demand and avoid past backlogs in applications caused by limited resources.
As fiscal 2016 drew to a close, a $137 million shortfall at the USDA's Farm Service Agency caused a backlog of loan applications.  Another continuing resolution later opened up funds to clear those applications.  A group of 13 farm and banking groups called on appropriators to provide the additional funding in a Dec. 2 letter, saying that without the provision, capital for loans would dry up during the period in which the continuing resolution was in effect.
The National Farmers Union praised the provision: "we applaud Congress for listening to the requests of family farmers and ranchers and providing funds in the continuing resolution for FSA to meet the record demand for operating loans," NFU President Roger Johnson said in a statement.  "Providing additional funding to FSA before the next fiscal year will help alleviate those producers waiting on direct operating loans and allow more applicants to access capital."
A recent report by the Federal Reserve Bank of Kansas City highlighted the tough credit and capital environment in the agriculture industry.  Declining commodity prices and farm income have taken a chunk out of farmers' working capital.  More than 90 percent of bankers surveyed reported deterioration in the level of working capital in the crop sector, compared to 1 percent of bankers who reported an improvement compared to the year prior.  Lower farm income has also led to increased demand for farm loans, as well as loan renewals and extensions, with most of the money going to repay operating expenses
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12-10-2016 Legislative Update
 
The Legislative Issues Committee has been hard at work since our national convention in Washington D.C. back in July.  Farm loan funding continues to be one of our most important priorities as our demand has greatly increased in light of the struggling farm economy. 
 
NACS continues to strengthen its relationship with other Ag credit and farm related groups.  This group has become known as the Ag Lending Coalition, which NACS was instrumental in bringing together in the fall of 2015.  This group started a push this past spring to raise awareness of the struggling farm economy and need for additional FSA loan funds.  A good example of the positive press we received in early June of 2016 can be found at http://sustainableagriculture.net/blog/release-farm-groups-and-farm-lenders-appeal-for-assistance-during-credit-crunch/.
 
The efforts of NACS and the Ag Lending Coalition groups paid off as USDA reprogrammed $185 million in early September and made these funds available for backlogged direct and guaranteed OL’s.  The groups thanked the appropriators in a letter in mid-September, but also began to lay the ground work for the effects that a long-term CR would have on FSA’s loan programs and the need for more funds as the 2016 OL backlog was not fully taken care of.  This letter can be read here.
 
The key request in this September letter, beyond the need for additional loan funds, was the request for FSA farm loan funds for 2017 to be included in the anomalies package for any long-term CR.  By being included in the anomaly package, FSA loan funds would be issued as needed during the CR and would not be limited to the apportionment allotted during the CR based on its length.  This request was not traditional for FSA loan funding under a CR and was not included in the original CR that ran through December 9, 2016.
 
NACS and the Ag Lending Coalition groups remained dogged though and again reached out to the Appropriations Committees with a letter of support on December 2, 2016.  This support letter did receive a fair bit of press.  Below is an excerpt from POLITICO’S Morning Ag that was published in the early morning hours of December 6, 2016.  A link to view the latest letter is included in the last sentence of the article.
 
POLITICO’S Morning Ag
12/06/2016 09:20 AM EDT
FARM GROUPS RENEW REQUEST FOR MORE USDA LOAN MONEY: Peak demand for agricultural loans arrives in the winter and spring months, and a group of farm and lending organizations is urging appropriators to make sure the next stopgap federal spending bill — expected to be unveiled today — gives USDA enough money to get through the height of the lending season. The continuing resolution, which needs to be passed by Friday to avoid a government shutdown, should include an anomaly that ensures USDA has the flexibility to provide direct and guaranteed loans in proportion to demand, groups like the National Sustainable Agriculture Coalition, American Bankers Association, National Farmers Union and Farm Credit Council said in a letter to leaders of the House and Senate agricultural appropriations committees.
Entering fiscal 2017, USDA had a backlog of direct and guaranteed operating loan applications due to a $137 million shortfall, the letter said. The CR that expires Friday helped clear the backlog, but the groups worry that peak demand will cause USDA to run out of money during the period of the new CR — which is expected to last through April.
The groups also said that USDA and the Office of Management and Budget have met to discuss allowing an "advanced allocation" of funds, so USDA can continue servicing loan applications. Congressional approval would be needed. "If that were the scenario that happens, we would strongly urge your swift sign-off," the letter said. "Whether through an anomaly or through such an agreement, we believe clear and definitive action is needed to provide farmers and ranchers with needed credit during the prime lending season." Read the letter here.
Later that day NACS was made aware that our push to be included in the anomalies package was successful.  The actual language reads ‘‘SEC. 146. Amounts made available by section 101 for ‘Department of Agriculture—Farm Service Agency— Agricultural Credit Insurance Fund Program Account’ may be apportioned up to the rate for operations necessary to fund loans for which applications are approved.”  This is an ENORMOUS win for NACS.  This will help ensure that OL funds are available to us in February and March of 2017, our peak lending months, and that we don’t have a stopgap in funds until the current CR expires on April 28, 2017.
 
The difficulty in getting FSA farm loan funding included in this anomaly package was recognized by the Chair of the Senate Ag Appropriations Committee in an article in POLITICO later that same day.
  
POLITICO Pro Agriculture Whiteboard
By Catherine Boudreau
12/06/2016 04:45 PM EDT
A provision to give the USDA the authority to make loans to farmers and ranchers in proportion to demand is expected to be included in the stopgap government funding bill being unveiled today, Sen. Jerry Moran told POLITICO.
The provision, known as an "anomaly" in the continuing resolution, is designed to ensure that the department can continue to offer credit to producers during the winter months when demand is at its peak, the chairman of the Senate Appropriations agriculture panel said.
This year, the USDA has run out of money for direct and guaranteed operating loans, which caused a backlog of applications, a situation that should be avoided given the difficult financial time farmers have had, Moran said.
"This was not an easy anomaly to accomplish," Moran said, noting that there was a high bar for special provisions because of pressure to pass a "clean" CR. "But I believe we were able to convince colleagues that the crisis in farm country is real."
The news comes after 13 farm and lending groups sent a letter to Moran and other leaders of the House and Senate Agricultural Appropriations committees requesting the anomaly.
The stopgap spending measure, which is likely to last through April, should be made public this evening. Passage is expected in the House on Thursday and in the Senate on Friday in order to avoid a government shutdown.
The Legislative Committee and McAllister and Quinn will continue their efforts to push for an increase in loan funds in the final FY 2017 appropriations bill, should there be one next spring.  As always, if there is anything that you feel the committee needs to be focusing on, please let myself know or one your NACS national board members. 
Have a wonderful holiday season over these next few weeks. 
Sincerely,
 
Ben J. Herink                                                                                                        
Legislative Issues Committee Chair
 

Washington Report Headlines

Congressional & Administration News

• Senate Passes Stopgap U.S. Government Funding to Avoid Shutdown
• USDA Announces Enrollment Period for Safety Net Coverage in 2016

Federal Employee News

• $15 Minimum Wage? Labor Economists Still Not Sure

 News from the Halls of Congress & The White House

Senate Passes Stopgap U.S. Government Funding to Avoid Shutdown

The Senate passed a stopgap measure on Thursday to avoid a potential U.S. government shutdown this weekend, as talks continue on a $1.1 trillion spending plan and a separate measure to revive dozens of tax breaks. The measure, passed by voice vote, would finance the government through Dec. 16. It requires approval by the House, which plans to vote on it on Friday, one day before current funding is set to expire.

Lawmakers and the White House are negotiating over a list of policy changes that Republicans insist on adding to the spending bill, including lifting a 40-year-old ban on the export of most U.S. crude oil, and blocking Syrian refugee resettlement in the U.S. House Democrats announced their own demand on Thursday, which would use the spending bill to remove a nearly two-decade-old ban on research about gun violence by the Centers for Disease Control and Prevention. The gun research issue is among the items under discussion. A text of the spending bill may be released this weekend to prepare for a House vote by the middle of next week.

Congress is simultaneously negotiating two fiscal measures, one that would fund the government through September 2016, and another that would extend several dozen expired tax breaks that need to be renewed before year-end. The bills aren’t connected in any substantial way, except that lawmakers are now using horse-trading on the tax extender bill help reach a compromise on the spending measure.

With the 2016 election nearing, Republicans want to avoid a repeat of the 16-day federal government shutdown in 2013 that hurt their standing in public opinion polls. On the tax extensions, Republicans are pushing to make a number of business incentives permanent. Those include the business research and development tax credit, and a break that allows small businesses to take a larger depreciation allowance for an asset’s value during the first year after purchase. Democrats, meanwhile, seek a permanent extension of the current Child Tax Credit, the Earned Income Tax Credit and the college-tuition tax credit, which are set to expire at end of 2017. The tuition tax credit provides as much as $2,500 per student for people with adjusted gross incomes as high as $80,000 for individuals and $160,000 for families.

Among other items awaiting renewal is a sales tax deduction that’s popular in Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming because those states don’t tax income. Some Democrats want at least a 10-year extension of wind and solar tax breaks, in exchange for lifting the ban on U.S. crude oil exports as part of spending bill. Democrats think those tax breaks should be tied in terms of size and scope to any benefits oil companies receive from lifting the export ban.

Also at issue is whether the spending bill will include a Republican proposal, opposed by Democrats, to block Syrian refugee resettlement in the U.S., as well as a plan backed by both parties to tighten a visa waiver program that eases travel to the U.S. for some 20 million people a year. Both topics become priorities for many in Congress following terrorist attacks that killed 130 people in Paris in November and 14 in San Bernardino, California, on Dec. 2.
 
USDA Announces Enrollment Period for Safety Net Coverage in 2016

U.S. Department of Agriculture (USDA) Farm Service Agency (FSA) Administrator Val Dolcini today announced that producers who chose coverage from the safety net programs established by the 2014 Farm Bill, known as the Agriculture Risk Coverage (ARC) or the Price Loss Coverage (PLC) programs, can begin visiting FSA county offices starting Dec. 7, 2015, to sign contracts to enroll in coverage for 2016. The enrollment period will continue until Aug. 1, 2016. The choice between ARC and PLC is completed and remains in effect through 2018, but producers must still enroll their farm by signing a contract each year to receive coverage.

Producers are encouraged to contact their local FSA office to schedule an appointment to enroll. If a farm is not enrolled during the 2016 enrollment period, producers on that farm will not be eligible for financial assistance from the ARC or PLC programs should crop prices or farm revenues fall below the historical price or revenue benchmarks established by the program.

The two programs were authorized by the 2014 Farm Bill and offer a safety net to agricultural producers when there is a substantial drop in prices or revenues for covered commodities. Covered commodities include barley, canola, large and small chickpeas, corn, crambe, flaxseed, grain sorghum, lentils, mustard seed, oats, peanuts, dry peas, rapeseed, long grain rice, medium grain rice (which includes short grain and sweet rice), safflower seed, sesame, soybeans, sunflower seed and wheat. Upland cotton is no longer a covered commodity.

The ARC and PLC programs were made possible by the 2014 Farm Bill, which builds on historic economic gains in rural America over the past six years, while achieving meaningful reform and billions of dollars in savings for taxpayers. Since enactment, USDA has made significant progress to implement each provision of this critical legislation, including providing disaster relief to farmers and ranchers; strengthening risk management tools; expanding access to rural credit; funding critical research; establishing innovative public-private conservation partnerships; developing new markets for rural-made products; and investing in infrastructure, housing and community facilities to help improve quality of life in rural America.
 
Federal Employee New

$15 Minimum Wage? Labor Economists Still Not Sure 

The fight for a $15 per hour minimum wage began as a worker organizing demand and is picking up support from a growing share of Democratic politicians, but even some liberal economists wonder if that number is too high. A wide range of labor economists favor increasing the federal minimum wage from its current $7.25 rate. Although many are fearful about the possible job losses that could come with going all the way up to the $15 per hour.

The right answer is that no one knows the impact this will have, and it's not exact science. Just because economists sign a letter in favor of a wage raise doesn't mean they're sure about how well the hike will work out. Two-thirds of nearly 50 leading economists, including those in labor and other focus areas, either agreed or were uncertain when asked if a federal minimum wage of $15 by 2020 would substantially reduce the employment rate.

Any economist who believes that they know where the sweet spot is, is talking beyond the data.  Certainly there are some places in the country where $15 is not a big deal, but there are other places where wages are much lower and it would be a big deal. The genesis of the $15 figure can be likely pinpointed to a day-long walkout in 2012 by some 200 fast-food employees in New York City. That action sprang from a campaign backed mostly by the Service Employees International Union, with the stated goals of achieving at least $15 per hour and union representation rights for fast-food workers.

Three years later, those two demands have not been met, but the campaign, now known as the Fight for $15, has spread to hundreds of cities and other industries such as retail, home care and airport passenger services. Their 14th and most recent coordinated day of action was Nov. 10 in 270 cities. Under considerable financial and strategic support from the SEIU, the effort has also played what some see as a major role in the passing of $15 minimum wage ordinances in three West Coast cities.

A pair of Democrat-backed bills to raise the federal minimum wage to $12 and $15 respectively is unlikely to move in Congress. Still, the fast-food movement and growing number of state and local minimum wage hikes have started a debate among left-leaning lawmakers and economic observers about just how high the federal pay floor should be set.

It is a way to signal that, while it may be difficult to get it through in Congress now, it is worth a try because there are people in Congress that believe this is a righteous and just cause. Worker productivity jumped by more than 52 percent in the last 20 years and workers’ inflation-adjusted hourly earnings increased by only about 17 percent over the same period.

Meanwhile, the divide between the highest and lowest ends of the income spectrum appears to be growing. The median net worth for all American families ticked up to $81,000 from $77,000 over the two-decade period ending in 2013. The net worth of the country's upper-income families, those earning at least $150,000 per year, skyrocketed to $639,000 from $318,000 during the same time. Economists who back a minimum wage hike believe the low pay floor means that taxpayers wind up subsidizing businesses that pay their workers the minimum rates. That's because many of those workers are eligible for food stamps, public housing, Temporary Assistance for Needy Families (TANF) and other government assistance.

The Fast food industry could absorb a four-year move to a $15 minimum wage without having to shed jobs. Instead, employers could cover the increased payroll costs with a modest price increase, savings related to lower worker turnover, and higher sales based on both trends and more spending money for employees. Any increase needs to be somewhat gradual. If it is phased in over several years, you should get very little negative employment effect. But even some economists who are sympathetic have reservations about moving the floor to $15. At that point, the pay rate may outstrip worker productivity in fast food and retail positions based in areas where the cost of living is relatively low. Economically, if it is raised to $15 quickly, what is left is a lot of workers who don't generate $15 an hour in revenues and so it's unjustified.

Several labor economists also cited one economic indicator as a particular reason for hesitation. The ratio of minimum-to-median wage, which varies depending on region, is often used as a barometer of a state or city's ability to absorb a minimum wage hike without negative employment consequences. Based on the current federal level of $7.25, today's ratio is about 36 percent, down from 55 percent in 1968, when the minimum wage had its highest value. The median is the midpoint, where half of the workers earn more than that amount and the other half, less. Therefore, those now earning the minimum wage are paid hourly wages that are 36 percent of what the typical worker earns per hour.

Depending on wage growth trends in the next few years, the $12 by 2020 proposal would move the ratio back up to 55 percent. A $15 minimum wage over that time period would bring the ratio significantly higher than that, and that's why economists have been a bit dubious when folks talk about $15. $15 would be much more attainable if middle-wage workers see their pay rise more quickly over the next few years.

Below is the testimony given June 25, 2014 by Deputy Administrator Chris Beyerhelm before the House sub-committee.  Complete details of the hearing can be found at:  http://agriculture.house.gov/hearing/review-credit-availability-rural-america

Click HERE to access Mr. Beyerhelm's testimony.

Washington Report

Washington Report Headlines

Congressional News

·         House, Senate Panels Laying Groundwork for Early Action on ‘15 Bills

·         USDA Proposes to Close 250 FSA Offices 

Federal Employee News

·      Senate Pushing Ahead with Long Term Unemployment Bill

News from the Halls of Congress

USDA Proposes to Close 250 FSA Offices

 The U.S. Department of Agriculture March 26 proposed closing 250 Farms Service Agency offices nationwide in its fiscal year 2015 budget request.

The proposal alarmed members of the Senate Appropriations Agriculture, Rural Development, Food and Drug Administration and Related Agencies Subcommittee at a hearing, who expressed concern about modernizing technology and the implementation of 2014 farm bill programs.

More than 2,000 local FSA offices support the delivery of USDA programs, including crop insurance, disaster assistance and farm loans.

Agriculture Secretary Thomas Vilsak told the subcommittee that the USDA continually seeks ways to leverage scarce resources due to years of forced budget cuts. FSA's budget has gone from about $3.2 million in 2013, to $1.5 million requested for fiscal 2015.

However, Vilsak said the proposed closings are more about where the work is than saving money. There are currently 111 FSA offices with only one employee, and 30 with no employees, Vilsak said. The USDA hopes to consolidate and modernize these and other locations across the country to better serve farmers.

Modernization means updating information technology systems. Billions of dollars of annual farm program payments to producers depend on outdated IT systems, Vilsak said. Upgrading them would streamline business processes and deliver programs more efficiently.

Sen. Jon Tester (D-Mont.) expressed doubt over the feasibility of modernizing FSA information systems.

The USDA implemented MIDAS in April 2013, a data program that improved storage and retrieval of current farm records.  It integrated this information with land use and imagery data and producer information, according to the fiscal 2015 budget request.  Vilsak said that by the end of 2014 producers will be able to locate these records at local FSA locations, and by the end of 2015 access the records from their own home.

Sen. Mark Pryor (D-Ark.), chairman of the subcommittee, also raised concerns about the implementation of new programs authorized by the 2014 farm bill (P. L. No. 113-79). For example, under the new law direct crop payments were repealed, which paid farmers a fixed rate for every acre they owned. They are replaced with two programs expanding crop insurance, Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC), in which payments are made based on revenue shortfalls relative to certain benchmarks set by Congress.

Pryor asked whether closing various FSA locations could compromise USDA's ability to apply provisions of the farm bill, particularly in rural areas.  Vilsak told the subcommittee that the USDA will conduct a work study to pinpoint which FSA offices can be consolidated without harming service to farmers. Closures likely would occur in 2015.


House, Senate Panels Laying Groundwork for Early Action on ‘15 Bills

Ramped up schedule reflects appropriators' plan to move individual spending bills early this year in anticipation of floor action in summer.

The annual appropriations process is shifting into high gear, with House and Senate committees with jurisdiction over federal discretionary spending planning more than 30 hearings during the week of March 31.

Armed with leadership commitments that their bills will move to the floors of both chambers, House Appropriations Committee Chairman Hal Rogers (R-Ky.) and Senate Appropriations Committee Chairwoman Barbara Mikulski (D-Md.) have called a long list of top Obama administration officials to testify the week of March 31 in advance of writing the 12 spending measures this spring.

The 33 hearings appropriators in both chambers have scheduled reflects their plan to wrap up the sessions early and then be able to begin marking up the fiscal year 2015 spending bills by May in advance of floor action in the House and Senate. That scenario greatly increases their chances of passing the measures individually and avoiding a repeat of last year when all the fiscal year 2014 bills were rolled into one omnibus months after the start of the fiscal year.   Both Rogers and Mikulski want to avoid any replay of last year's budget process, which was marked by a lengthy government shutdown, furloughs, and funding cuts forced by sequestration.

They also want to remove any possibility that Congress will resort to another series of continuing resolutions to fund the government—which they equate to government on auto pilot and view as diminishing appropriators' role in setting government spending priorities.   Aiding their work is the December budget agreement that set so-called top line discretionary spending figures for both 2014 and 2015. In recent weeks, House Republican leaders removed any doubts that the House will follow the $1.014 trillion cap set out by the agreement negotiated by House Budget Committee Chairman Paul Ryan (R-Wis.) and Senate Budget Committee Chairman Patty Murray (D-Wash). In addition, they also said the House will follow its parameters for defense and nondefense spending.

Also assisting their work is the commitment from leaders in both chambers that they will make floor time available for the bills they develop. Mikulski announced her committee's plans to begin marking up bills May 22 after Senate Majority Leader Harry Reid (D-Nev.) said he would make floor time available in June and July for the measures.

Meanwhile, Republicans, even among those on the Appropriations Committee, also are less than enthusiastic about bills reflecting the $1.014 trillion cap.   The committee's next set of hearings begins April 1 with Securities and Exchange Commission Chairwoman Mary Jo White testifying. Then, on April 2, the panel has 10 separate hearings planned, with including sessions where Treasury Secretary Jacob J. Lew, Energy Secretary Ernest Moniz, Labor Secretary Thomas Perez, and Housing and Urban Development Secretary Shaun Donovan will testify on their department's budget requests. Samantha Power, U.S. ambassador to the United Nations, also is scheduled to appear before the panel.

The House committee also has another nine hearings scheduled on April 3, including an oversight session where all the Transportation Department's modal administrators will testify on their budgets and programs.   The week's hearings wrap up April 4 with another five meetings, including one where Attorney General Eric Holder will testify on the Justice Department budget.   Across Capitol Hill, Mikulski's committee has six hearings scheduled April 2, including sessions with HUD Secretary Donovan, U.S. Air Force Secretary Deborah James, and National Institutes of Health Director Francis Collins. On April 3 the committee has two additional hearings, including one with Holder testifying on DOJ's budget.


Federal Employee News

Senate Pushing Ahead with Long Term Unemployment Bill

The U.S. Senate voted to advance legislation restoring benefits for the long-term unemployed that the Obama administration has sought to revive since they expired late last year.

By a vote of 65-34, with 60 required for approval, the Senate agreed to move toward taking up the measure, which is the product of a bipartisan agreement struck earlier this month by Rhode Island Democrat Jack Reed, Nevada Republican Dean Heller and eight other senators.

Ten Republicans joined with the chamber’s 55 Democrats and voted in favor of advancing the bill, which faces opposition in the Republican-run House.

The bill, which the Senate probably will complete early next week, would reauthorize emergency unemployment benefits for five months.