WASHINGTON FARM REPORT

By PHILIP BRASHER REGISTER WASHINGTON BUREAU

Washington, D.C. – A battle could be brewing between the House and Senate on an issue that seldom gets much attention in Congress – rural development.

The chairman of the Senate Agriculture Committee, Sen. Tom Harkin, is preparing a series of rural development proposals, including funding for water and sewer improvements, venture capital and even child-care centers, that would increase federal spending by $2 billion over the next five years.

The farm bill that passed the House this summer had relatively little new money for rural development programs.

Only one program, which provides grants to develop new markets for processed farm commodities, was given a mandatory spending level – $30 million a year, according to an analysis by the Center for Rural Affairs, a Nebraska-based advocacy group.

A mandatory program must be included in the federal budget each year. Spending for other rural development programs in the House bill would be left to the discretion of congressional appropriations committees.

By contrast, all of the $2 billion in new rural development money that would be in Harkin’s legislation would be designated as mandatory spending, according to his staff, which provided a description of his plans.

“We need to help communities help themselves to create quality jobs and an improved quality of life,” says Harkin, D-Ia.

Among the beneficiaries of his proposals:

– Users of rural water systems. Harkin’s bill would provide $500 million for loans and grants for water and sewer improvements. That amount of money should clear half the backlog in applications facing the Agriculture Department.

– Families with young children, the elderly, and hospitals in rural areas. There would be $375 million to provide loans or grants to build child-care facilities and assisted-living facilities and to help hospitals upgrade equipment.

– Entrepreneurs. Some $100 million would be earmarked for microenterprise loans to people who want to start new businesses, $250 million for loans to venture capital groups that want to invest in businesses, and $500 million to help business leaders, local governments and nonprofit groups to form regional alliances for business development. Harkin also would increase lending to companies that install high-speed Internet service, considered a must by many businesses.

And that value-added grant program that got $30 million a year in the House bill would receive $40 million annually, or $200 million over five years, under Harkin’s plan.

Harkin hasn’t said where he will get the money for these initiatives. Under the pay-as-you-go budget rules, any new mandatory spending must be paid for through tax increases or budget cuts.

And it’s no guarantee that even if Harkin can muscle these spending plans through Congress that the programs won’t be robbed in future Congresses to pay for other priorities.

Republican-led Congresses repeatedly nicked several rural development programs that were authorized in the 2002 farm bill, including the value-added grants and Internet loans. (This is the reason the House Agriculture Committee’s chairman, Rep. Collin Peterson, D-Minn., gave for not putting more mandatory spending into rural development this year.)

Harkin has allies in the Bush administration for at least some of his ideas. In threatening to veto the House farm bill, the White House specifically cited the lack of funding for rural hospitals and infrastructure, among other reasons.

Agriculture Secretary Mike Johanns frequently says farmers themselves want the government to invest in rural development. “That’s where the jobs are created, that’s where you strengthen your small communities. All of those things are enormously important for rural America,” he said recently.

Child-care centers. Hospitals. Venture capital. Whatever else you can say, this is not the usual stuff of farm bills.

Reporter Philip Brasher can be reached at (202) 906-8138 or [email protected]

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