Continuing Resolution and Debt Ceiling

Posted on Oct 18, 2013
Late Wednesday Congress voted to approve a short term budget continuing resolution (CR) and debt ceiling increase that ended the partial government shutdown and requires a bicameral budget conference committee by December 13, 2013. The bill addresses the following issues:

Continuing Resolution -The government is funded at an annual rate of $986.3 billion through Jan. 15, 2014, or until fiscal year 2014 appropriations are enacted. -The federal government is open and all furloughed workers are expected to be back at work today, according to the Office of Personnel Management. -All furloughed federal workers will receive back pay. -Olmsted Lock and Dam Authority: Raises the 902(b) cap on the amount that can be spent on the Olmsted Project to $2.9 billion (from $1.56 billion currently). The measure does not appropriate funds, but allows work on the project to continue. The U.S. Army Corps of Engineers informed the Inland Waterways Users Board in August that the Olmsted project would be shuttered in November 2013 and would displace 400 workers if Congress did not act to raise the cap. If Olmsted were to have shut down, according to the Corps, it would have cost $40 million to restart the project. -Forest Service Fire Suppression: Received $600 million for fire suppression activities.

Debt Ceiling -The debt limit is suspended through Feb. 7, 2014 and is subject to a congressional joint resolution of disapproval. -The debt limit will be increased by an amount that accounts only for obligations issued to fund commitments that required payment before the end of the period. -The Treasury Department would be able to use extraordinary measures if Congress fails to raise the debt ceiling by Feb. 7, 2014.

Affordable Care Act -The only Affordable Care Act reform provision is a requirement to verify the incomes of anyone who seeks a subsidy under the health law. Subsidies are available to low income individuals seeking to purchase insurance on the exchanges.

The ongoing CR/debt ceiling debate had impacted agriculture in a number of ways during the past couple of weeks. Several key USDA agency programs were impacted including Farm Service Agency (FSA), Natural Resources Conservation Service (NRCS), Risk Management Agency (RMA) and Rural Development services.

Farm Bill Update

The extension of the 2008 Farm Bill expired on September 30, 2013 leaving many to wonder what impact the expiration will have on farmers, and, if Congress will be able to get a new Farm Bill reauthorized any time soon.

So far the impact of the Farm Bill expiring has resulted in a relatively small impact on Kentucky farmers so far. That's because some programs such as food stamps, some conservation programs and crop insurance remain permanently authorized or are otherwise funded thru Sept. 30, 2014. The more pressing deadline comes on Jan. 1 when 1949 permanent law would kick in requiring parity, starting with dairy payments. Wheat and other commodities would be affected later in 2014.

However, some programs were affected on October 1 including dairy, conservation and market programs. The Milk Income Loss Contract (MILC) program, which compensates dairy producers when milk prices fall below the cost of production, expired. Some conservation programs such as the Conservation Reserve Program (CRP) are closed to any new enrollments. Promotional export and market programs were also impacted. Export deals could be delayed or worse if the programs lay dormant too long.

Farmers and agricultural businesses are impacted by the uncertainty of future farm programs and are unable to effectively plan for the 2014 crop year until Congress takes further action on the Farm Bill. Certain other programs, including various agricultural disaster assistance programs, some conservation programs, specialty crop research, beginning farmer programs, bioenergy and market promotion programs expired in 2012 have been included for reauthorization in the House and Senate-passed bills but await final action by Congress.

The much larger impact on the agricultural community was due to the partial government shutdown, and action by Congress late yesterday in passing the three month CR should allow some attention to be directed to reauthorization of the Farm Bill. Conferees were named by both the Senate and House, with leadership expressing a desire to begin work. There are a number of obstacles that will require attention to generate a conference report that can pass both the Senate and House.

Nutrition will probably be the major issue that has the potential of derailing a conference report. Differences in funding (the Senate would reduce nutrition funding by about $4 billion over ten years versus the House reducing funding by nearly $40 billion during the same time frame) must be worked out in a way that might satisfy a Senate that felt $4 billion was too steep and a House that thought $40 billion might be a little light. Also, the Senate passed a comprehensive bill that included nutrition being authorized for the duration of the Farm Bill through 2018, but, the House passed their nutrition title separately but authorized it only through 2016.

The commodity title also contains significant differences that must be resolved. The Senate bill utilizes base acres in program calculations while the House uses planted acres. This needs to be resolved in a way that would be considered WTO compliant. Also, dairy is dealt with differently. The Senate reforms to dairy programs include a margin protection and market stabilization program while the House chose to not include the market stabilization program.

Another issue that must be resolved concerns permanent law. The comprehensive Senate bill follows previous trends to amend permanent law rather than repeal or replace it. However, the House bill would repeal 1938 and 1949 permanent law and replace it with the 2013 Commodity Title as becoming permanent law. Threat of reverting to permanent law has been a major impetus for Congress to move forward and reauthorize farm bills in the past.

Both the Senate and House have appointed conferees to the Farm Bill Conference Committee and it appears leadership plans to start the conference soon. The farm bill's top four negotiators met Wednesday, October 16 and authorized staff to step up discussions on the commodity title in anticipation that the full House-Senate conference could begin the last week of October.

Members in both parties said it remains to be seen what the fallout will be from the last few weeks of conflict over the government shutdown. From a schedule standpoint, it has already been costly, delaying the appointment of conferees and now the first meeting. Lucas and Stabenow anticipate that Congress will be out of session next week, meaning the earliest a full conference can meet is the week of Oct. 27.

Additional resources, including a CRS "Expiration and Extension of the 2008 Farm Bill" report and University of Missouri Food and Agricultural Policy Research Institute (FAPRI) report on "Impacts of Selected Provisions of the House and Senate Farm Bills" can be viewed at kyfb.com under Farm Bill Resources.

Water Resources Development Act (WRDA)

Passage of WRDA is a must to ensure the reliability of the most affordable and energy efficient mode of transporting agricultural products. More than 2 billion tons of domestic and import/export cargo move through US ports and waterways annually. The Senate passed S 601, the Water Resources Development Act of 2013 earlier this year, and it appears the House may schedule floor time next week to consider HR 3080, the Water Resources Reform and Development Act (WRRDA) Act of 2013.

WRRDA sets target expenditures from the Harbor Maintenance Trust Fund (HMTF), increasing each year so that by Fiscal Year 2020 and beyond, no less than 80 percent of the funds collected go to operation and maintenance activities.

In addition, WRRDA reforms and preserves the Inland Waterways Trust Fund (IWTF). It also alleviates strain on the IWTF by reducing the IWTF's support for the Olmsted Lock and Dam project to a cost share of 25 percent, instead of the current 50/50 approach.

As expected, there is not language increasing the user fee for the IWTF, but it does contain provisions for the study of revenue collection. There are currently discussions underway with Ways and Means Committee members and leadership to attach a user fee increase at some point in the process.

More information can be accessed at kyfb.com.

Immigration & Farm Labor Reform

The Senate passed a comprehensive immigration reform bill, S 744, earlier this year. The House had been expected to begin taking a more piecemeal approach to immigration reform this month, but now it appears consideration will be pushed into November at the earliest.

As many as nine or ten separate bills may be considered by the House dealing with issues such as increased border security, agricultural guestworker reform, low-skilled non-ag, highly skilled workers, legalization, interior enforcement, E-verify and asylum. Border security, HR 1417 is expected to be the first immigration reform bill considered by the House. The next bill is expected to be HR 1773, the Agriculture Guestworker Act.

Once the House begins debate on immigration reform, it is expected that consideration of subsequent bills will move fairly rapidly.

Tagged Post Topics Include: Affordable Care Act, Budget, Congress, Debt Ceiling, Farm Bill, Farm labor, FSA, Government Shutdown, Immigration, NRCS, RMA, Rural Development, Water Resources Development Act