This week and next, the House and Senate move closer to finalizing a funding bill for the remainder of FY 2013.  At the same time, both chambers prepare to mark up their respective FY 2014 budget resolutions before an April 15 deadline.  Sequestration officially went into effect on March 1, and the current government-funding bill expires on March 27.  So what to make of it all?  We break it down in the following post.

House Appropriations Bill

On Wednesday, March 6, the House of Representatives passed a six-month funding bill to keep the government running through the rest of this fiscal year.  The bill, known as a “continuing resolution” (CR), would incorporate sequestration cuts and would reduce non-defense discretionary spending by roughly 13 percent in the remaining seven months of the fiscal year.  Total discretionary government spending, factoring in the sequestration cuts, is now lower than the levels called for in the House Republican budgets for the past two years.

In glaring contrast to the across-the-board cuts to non-military spending, the House CR includes two more normal funding bills, with updated funding levels – for Defense and for Military Construction and Veterans’ Affairs – that the House and Senate negotiated last year.  Updated, more flexible funding is evidently, according to the House authors, only relevant to military spending and not to the rest of the government.

Senate Appropriations Bill

The Senate announced that it will begin consideration of its own FY 2013 CR on Monday.  Whereas the House CR includes only two  updated funding bills, the Senate CR is expected to also include the full FY 2013 bills for Agriculture, Homeland Security, and Commerce-Justice-Science appropriations bills, as negotiated by the House and Senate last year.  Recall that House and Senate appropriators had nearly finalized a full-year omnibus appropriations package for FY 2013 back in December, but that package never came to fruition as all attention drifted to the separate fiscal cliff deal negotiated by White House and Senate Minority Leader Mitch McConnell (R-KY).

We fully support a return to some semblance of normal order with the inclusion of the full FY 2013 Agriculture Appropriations bill, and we strongly urge Congress to continue to move in this direction.  As a reminder, the Senate Appropriations Committee’s FY 2013 Agriculture Appropriations bill from last April provided $22.7 million for the Sustainable Agriculture Research and Education (SARE) program, including first-time funding for the Sustainable Agriculture Federal-State Matching Grant component of the program.  It also slightly increased funding for the Value-Added Producer Grants (VAPG) program and steered clear of making Changes in Mandatory Program Spending (CHIMPS) to the Conservation Stewardship Program (CSP), Farmland Protection Program (FRPP), Wetlands Reserve Program (WRP), and several other conservation programs.  Because these funding levels were then negotiated behind closed doors with the House late last year, we do not know the exact levels that will be included in next week’s Senate CR.

Remaining Questions on House and Senate Bills

• Conservation Stewardship Program – As we have mentioned elsewhere, the first FY 2013 CR unintentionally froze the largest of all USDA conservation programs, the Conservation Stewardship Program, in FY 2013.  This technical error, which unfortunately was not fixed in the bill passed by the House this week, has prevented USDA from administering a CSP sign up this year.  We are very optimistic that this problem will be addressed in the Senate CR.  However, we must keep the pressure on House and Senate negotiators to ensure that the fix is included in the final FY 2013 appropriations bill.

• Farm Bill Stranded Programs – Congress still needs to deal with FY 2013 funding for the farm bill programs for which funding was not included in the nine-month extension of the old farm bill passed on New Years Day.  This would be mandatory funding, not discretionary, so most logically would have been dealt with in a budget deal that does away with or postpones sequestration and increases and extends the debt limit.  Congress having failed to attend to that in the past few weeks (despite 52 votes in favor of such a move in the Senate), the current appropriations bill becomes the best opportunity to adjust mandatory spending to provide for the stranded programs.  The appropriations bill is already making adjustments to farm bill mandatory spending, so going further down this road in these extraordinary times is a reasonable proposal.

• Fair Competition and Contract Reform – Beyond funding levels, it remains to be seen whether the Senate CR includes the anti-competition, anti-farmer “GIPSA” rider that the FY 2013 House Agriculture Appropriations bill included last year.  (Legislative riders are controversial policy provisions that hitch a ride on appropriations bills that otherwise deal only with funding matters in order to escape full and open debate in the committee that has jurisdiction over the relevant policy area.)  The GIPSA rider would force USDA to rescind the basic contract fairness rules that the agency put in place in 2011 to protect livestock producers.  It would be a particular travesty for the rider, which originated in the House, to have been left out of Wednesday’s House CR, only to be included in next week’s Senate CR.  Hundreds of groups, including the major farm lobby organizations and smaller farm groups, oppose the GIPSA rider language and support basic contract fairness in the livestock marketplace.

• Direct Farm Loans – The House CR from Wednesday increased funding for direct farm operating loans and guaranteed farm ownership loans by roughly $200 million and $500 million, respectively.  Farm loans, and in particular direct farm loans, are one of the most effective tools that USDA has to help beginning and socially disadvantaged farmers and ranchers access farm land and equipment.  Demand for direct farm operating loans has exceeded supply for several years, so this funding increase is much needed.  Unfortunately, no similar increase for the even more highly oversubscribed direct farm ownership loan program was included in the draft bill.  We are hopeful that the Senate CR will increase funding for both direct farm operating and direct farm ownership loans.

FY 2014 Budget Resolutions and Beyond

Each year, the House and Senate are supposed to develop budget resolutions to guide yearly spending decisions.  This year, both chambers of Congress must produce budget resolutions by April 15; otherwise, members will not be paid their salaries until the late in 2014 under the terms of a previous agreement.

House Budget Committee Chairman Paul Ryan (R-WI) will release his budget on Tuesday, March 12, and the Committee will debate the resolution on Wednesday, March 13.  The Ryan budget is expected to include deep cuts to farm bill spending.  Recall that last year’s House budget called for $180 million in cuts to farm bill spending over ten years.  For comparison, the House Agriculture Committee-passed farm bill from last July would cut roughly $35 billion over the same period.

The Senate Budget Committee is expected to debate its own FY 2014 budget resolution on Thursday, March 14.  We currently expect the Senate Budget proposal to contain farm bill spending levels closer to the $23 billion cut that the Senate adopted last year during the initial farm bill debate.  We also expect the Senate budget to have higher discretionary spending levels for agriculture compared to the House bill.

In recent years, we have seen a move away from normal order.  Next week’s Ryan budget will no doubt make the situation even worse by forcing appropriators to work within an impossibly restrictive spending cap.

Meanwhile, the Obama Administration announced that it will release its FY 2014 budget request on April 8.  The Administration’s budget request is meant to inform the annual appropriations process and is typically released in February each year.  This year’s budget request was delayed due to questions surrounding sequestration.  Being released so late in the year, it may still have substantial relevance to the work on FY 2014 appropriations bills, but will be released too late to have any impact at all on the budget resolution process for FY 2014.

The FY 2014 budget resolutions may also have a real impact on the  farm bill process if they include budget reconciliation instructions.  Reconciliation instructions could compel the Agriculture Committees to meet a certain level of cuts to farm bill spending by a certain date, and therefore to work to finalize a farm bill; however, at this point, we have not heard any indications that either resolution will include reconciliation instructions.  In our view, getting a budget reconciliation agreement hammered out between the House and the Senate may well be the best chance there is for getting a full five-year farm bill re-authorization accomplished this year.

As the process continues to unfold, you can refer back to our earlier blog post for detailed information on what the FY 2013 funding legislation, FY 2014 budget resolutions, and sequestration debate mean for the programs that we care about.