CAPITOL facts & figureseconomics and finance

the council of state governments aPril 2011

Reductions in USDA Funding and Congressional Earmarks to Impact Rural Areas

The American political landscape has become increas-ingly 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. Congres-sional Republicans from both houses, as well as President Obama, also have expressed support to end earmarks, result-ing 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 $6.5 billion 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 decreas-ing the country’s dependence on fossil fuels, as well as spurring economic growth in a developing industry.

• The administration would direct $400 million in finan-cial assistance specifically for biofuels, another indica-tor 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 priori-

ties 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 pro-grams of the U.S. Forest Service to improve efficiency.

• The administration would focus its effort on conserva-tion 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 per-cent from 2010 levels.2

• Marketing and regulatory programs spending would decrease by 5 percent.

• Funding for the Natural Resources Conservation Ser-vice would increase 67 percent from 2010 levels.

• Rural Housing Service funding would decrease by 46 percent from 2010 levels.

1the council of state governments

SOURCE

2 the council of state governments

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 re-quested $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.

Nathan Dickerson, CSG Research Analyst; ndickerson@csg.org

1The Washington Post. “Obama’s 2012 Budget Proposals: Full Budget Proposal Summary.” http://www.washingtonpost.com/wp-srv/special/politics/documents/2012budget-full-summary.html#document/p51. Retrieved April 13, 2011.2Huffstutter, P.J. “Obama’s Budget Would Deeply Cut Farm Subsidies.” Los Angeles Times. Feb. 14, 2011. http://articles.latimes.com/2011/feb/14/business/la-fi-farm-subsidy-cut-20110214. Retrieved April 22, 2011.3Steinhauer, Jennifer. “Lawmakers’ End of Earmarks Affects Local Programs Large and Small.” Feb. 7, 2011. http://www.nytimes.com/2011/02/08/us/politics/08earmark.html?pagewanted=1. Retrieved April 22, 2011. 4Taxpayers for Common Sense. “Complete TCS FY2008 Earmark Database.” 2008. Retrieved fromhttp://taxpayer.net/user_uploads/file/Appropriations/fy2008/Databases/bigkahunav.2.xls Taxpayers for Common Sense. “Complete TCS FY2010 Earmark Database.” 2010. Retrieved fromhttp://taxpayer.net/user_uploads/file/Appropriations/FY2010/databases/Final/BigKahuna2010v.2.xls 5Taxpayers for Common Sense. “FY 2011 Earmark Request Database.” Retrieved fromhttp://www.taxpayer.net/user_uploads/file/Appropriations/FY2011/databases/Requests/FY2011_Earmark_Requests_Final.zip 6The Associated Press. “Alaska: End Sought For ‘Bridge To Nowhere.’” Sept. 22. 2007. http://query.nytimes.com/gst/fullpage.html?res=9A04E7D81F3AF931A1575AC0A9619C8B63. Accessed April 12, 2011.

REFERENCES

the council of state governments 3

State

Department of Agriculture Total (in thousands of

dollars)

Congressional Earmarks

(disclosed and undisclosed.)

Dept. of Agriculture

Spending per capita

Earmarks Per Capita

Population (2007 est.)

Population/Square Mile of

Land (2007 est.)

alabama 466,428 $320,157,215 $0.10079 $69.18 4,627,851 91.2alaska 134,923 $344,403,252 $0.19741 $503.90 683,478 1.2arizona 547,216 $214,458,485 $0.19304 $75.65 2,834,797 55.8arkansas 327,527 $118,581,422 $0.05167 $18.71 6,338,755 54.4california 3,407,484 $903,749,374 $0.09322 $24.72 36,553,215 234.4colorado 286,962 $91,736,598 $0.05903 $18.87 4,861,515 46.9connecticut 193,589 $143,586,001 $0.05527 $41 3,502,309 722.9delaware 84,673 $55,242,220 $0.09791 $63.88 864,764 442.7florida 1,267,396 $476,161,116 $0.06944 $26.09 18,251,243 338.4georgia 959,669 $214,028,931 $0.10054 $22.42 9,544,750 164.8hawaii 116,030 $288,560,430 $0.09041 $224.84 1,283,388 199.8idaho 152,128 $394,072,238 $0.01184 $30.66 12,852,548 18.1illinois 917,080 $155,673,665 $0.61163 $103.82 1,499,402 231.2indiana 465,572 $198,761,980 $0.07337 $31.32 6,345,289 176.9iowa 253,725 $152,116,832 $0.08491 $50.91 2,988,046 53.5Kansas 240,549 $156,800,290 $0.08665 $56.48 2,775,997 33.9Kentucky 438,665 $214,052,142 $0.10342 $50.47 4,241,474 106.8louisiana 542,476 $295,158,193 $0.12636 $68.75 4,293,204 98.6maine 101,023 $38,727,636 $0.07669 $29.40 1,317,207 42.7maryland 344,033 $303,395,065 $0.06123 $54 5,618,344 574.8massachusetts 381,937 $219,780,996 $0.05922 $34.08 6,449,755 822.7michigan 758,899 $229,564,397 $0.07535 $22.79 10,071,822 177.3minnesota 430,727 $220,961,455 $0.08287 $42.51 5,197,621 65.3mississippi. 405,081 $510,594,729 $0.13878 $174.93 2,918,785 62.2missouri. 451,681 $346,562,905 $0.07684 $58.96 5,878,415 85.3montana 115,978 $91,305,141 $0.12108 $95.32 957,861 6.6nebraska 170,506 $45,635,460 $0.09608 $25.72 1,774,571 23.1nevada 144,341 $217,111,889 $0.05626 $84.63 2,565,382 23.4new hampshire 63,232 $64,395,614 $0.04805 $48.94 1,315,828 146.7new Jersey 511,375 $285,008,381 $0.05887 $32.81 8,685,920 1171new mexico 255,314 $211,696,657 $0.12961 $107.46 1,969,915 16.2new York 1,708,295 $435,504,505 $0.08852 $22.57 19,297,729 408.7north carolina 813,907 $233,776,930 $0.08982 $25.80 9,061,032 186north dakota 81,501 $105,461,121 $0.12740 $164.86 639,715 9.3ohio 835,120 $304,491,876 $0.07283 $26.55 11,466,917 280oklahoma 436,122 $109,190,028 $0.12057 $30.19 3,617,316 52.7oregon 416,222 $95,428,715 $0.11107 $25.46 3,747,455 39Pennsylvania 840,819 $521,831,113 $0.06763 $41.97 12,432,792 277.4rhode island 74,878 $84,660,448 $0.07078 $80.03 1,057,832 1012.3

south carolina 397,609 $150,985,809 $0.09021 $34.25 4,407,709 146.4

south dakota 99,774 $91,684,537 $0.12531 $115.15 796,214 10.5tennessee 544,042 $215,300,276 $0.08837 $34.97 6,156,719 149.4texas 2,455,193 $648,804,748 $0.10271 $27.14 23,904,380 91.3utah 198,415 $134,625,635 $0.07501 $50.89 2,645,330 32.2vermont 69,962 $76,214,254 $0.11261 $122.68 621,254 67.2virginia 416,536 $332,497,992 $0.05401 $43.11 7,712,091 194.8Washington 502,233 $329,333,971 $0.07764 $50.91 6,468,424 97.2West virginia 178,793 $329,828,540 $0.09867 $182.02 1,812,035 75.3Wisconsin 381,116 $182,583,999 $0.06804 $32.59 5,601,640 103.1Wyoming 50,174 $22,086,768 $0.09597 $42.24 522,830 5.4

Resources: Taxpayers for Common Sense. (2008). Complete TCS FY2008 Earmark Database. Retrieved from http://taxpayer.net/user_uploads/file/Appropriations/fy2008/Databases/bigkahunav.2.xlsU.S. Census Burea. Table 13. State Population - Rank, Percent Change, and Population Density. Retrieved from Population Estimates: http://www.census.gov/compendia/statab/2009/tables/09s0013.xlsU.S. Census Bureau. (2009, July). Federal Aid to States for Fiscal Year 2008. Retrieved from http://www.census.gov/prod/2009pubs/fas-08.pdf

Federal Earmark and Department of Agriculture Expenditures