NSAC's Blog

Bare Minimum, Last Minute

October 8, 2020

US Capitol. Credit: USDA

Last Wednesday night with only a few hours to spare, Congress did what many observers and advocates for months had been citing as inevitable. They sent an appropriations Continuing Resolution (CR) to the President’s desk that puts off final decisions about Fiscal Year (FY) 2021 spending until after the November general election. The CR ensures that there will be no government shutdown between now and the election but leaves important funding decisions until after the election.

The federal government operates on a fiscal year ( October 1st – September 30th) rather than a calendar year. The end of FY 2020 was September 30th and the deadline by which Congress must pass appropriations bills to fund all aspects of the federal government. Due to increased polarization and partisanship in Congress over the last two decades it has become very rare that members of both parties, in both chambers, are able to come together and pass all 12 appropriations bills prior to the September 30th deadline. Instead Congress has increasingly relied on passing one or more CRs to buy additional time for leadership and appropriators to negotiate complicated spending deals, often delaying difficult decisions.

The CR that was signed by the President late Wednesday night (technically Thursday morning after an hour-long lapse in federal spending) extends FY 2020 spending levels into FY 2021 until December 11 – the new deadline by which Congress must act to prevent a Government shutdown. While a CR is preferable to a lapse in government funding leading to a painful government shutdown amidst a global pandemic, having FY2021 spending frozen at FY2020 levels means that none of the hard-fought increases to sustainable food and agriculture programs included in the House-passed agriculture spending bill will come to fruition in the immediate future.

How Did We Get Here?

Under “regular order” the official appropriations process usually kicks off upon the release of the President’s budget proposal typically in February each year. The release of the President’s budget is then followed by the House and Senate Budget committees adoption of a budget resolution that sets the framework for the House and Senate Appropriations Committees to make decisions regarding how to allocate funding.

Setting a framework for spending decisions, the Budget Resolution includes what is known as the 302(a) allocation. This sets the topline amount for discretionary funding available to the appropriations committee which they are free to divide among their subcommittees (including the Agriculture Appropriations subcommittee) who actually write the appropriations bills. The division of funding amongst the subcommittees is known as the 302(b) allocations.

Because the two-year budget deal that was struck last summer included a compromise regarding the FY 2021 defense and nondefense 302(a) allocations there was no need for the Budget Committees to develop and pass such a budget resolution this year.The two-year budget deal set the FY 2021 defense spending topline level at $740.5 billion and the non-defense discretionary spending topline level at $634 billion. Food and agriculture spending is part of the non-defense discretionary spending pool of funding. The FY 2021 topline amount is about $2 billion more than the FY 2020 topline amount.

The amount allocated to each appropriations subcommittee is not done by formula and is very political in nature which often results in different allocations for each subcommittee when comparing the House and the Senate appropriations bills. Consequently, the 302(b) allocations are a crucial element that must be negotiated between House and Senate appropriators in order to send a final package, or a series of grouped appropriations bills, to the President’s desk.

Hobbled by the pandemic and with a particularly consequential election looming, the appropriations process for FY 2021 followed an unusual path. The House successfully introduced, marked-up in committee and passed a majority of their 12 appropriations bills, including the agriculture spending bill. However due to partisan disagreements, the Senate did not release, mark-up, or pass a single appropriations bill. In the following section you will find an overview of the House-passed agriculture appropriations bill and sustainable agriculture and food systems highlights from the bill.

The Continuing Resolution and the Commodity Credit Corporation

The CR’s finalization and passage went down to the wire, in part due to objections from Democrats. House and Senate Democrats have expressed concerns with the fiscally irresponsible and political manner in which the USDA has used the spending authority provided to them through the Commodity Credit Corporation (CCC).

The CCC is a New Deal era corporation wholly owned by the federal government that was created “to stabilize, support, and protect farm income and prices, and to assist in the maintenance of balanced and adequate supplies of agricultural commodities.” The CCC has broad authority to take a wide range of actions to fulfill its purpose but most often as a financing institution for many USDA programs including commodity, conservation, and local food programs. The CCC has the authority to receive and spend up to $30 billion from the U.S. Treasury each fiscal year for its activities. Net losses from its operations are routinely replenished by the annual Congressional appropriations process.

USDA used the CCC’s broad authority “to stabilize, support, and protect farm income and prices” to create its Market Facilitation Program to help stabilize plummeting farm prices and incomes precipitated by the trade war with China, even though no such specific program was authorized by Congress. It was this same authority that the USDA used to develop the Coronavirus Food Assistance Program (CFAP) that has been providing direct payments to producers in the wake of the pandemic.

There had been concern among some producer groups, that because of the cost of MFP and CFAP direct payment programs, the USDA might not have enough funding to make traditional commodity program payments and conservation program payments in October and November. Under current law the reimbursement of any net losses to CCC through the annual appropriations process does not occur until mid-November after the CCC has filed its annual fiscal report. This year, however, USDA wanted that reimbursement before it had provided its fiscal report to Congress on how the previous allotment of CCC funding had been used. Democrats objected to including an “anomaly” in the CR that would reimburse or replenish the CCC to its $30 billion level of funding prior to the USDA completing its legally required fiscal report on CCC spending.

Democrats objected because they felt it was fiscally irresponsible to waive that reporting requirement (which USDA was fully aware of when designing its ad hoc farm payments programs) and they were concerned that USDA was using the CCC as a political slush fund to buy votes ahead of the November general election.

In the end, Democrats lifted their objections to automatically replenishing the CCC up to the $30 billion level prior to the filing of its statutorily required fiscal report in exchange for $8 billion in pandemic related nutrition assistance to help feed hungry children and families.   

House Agriculture Appropriations Overview

Now that we have temporary funding levels in place through mid-December, Congress can get back to work on negotiating final funding levels for FY 2021. The House-passed agriculture spending bill provides a total of $23.98 billion in discretionary funding for the USDA and the Food and Drug Administration (FDA), a modest increase of 2 percent ($487 million) above the FY 2020 enacted level.  Overall, NSAC is pleased with the final FY 2021 appropriations for agriculture spending and commends appropriators for comprehensive funding of programs at levels that meet or exceed the priorities of the sustainable agriculture community for FY 2021, and avoid harmful changes in mandatory program spending (CHIMPS).

Funding levels in the FY 2021 House Agriculture appropriations bill for NSAC priority programs are as follows:

NSAC was also pleased that provisions from Congresswoman Pingree’s Agriculture Resilience Act (ARA) were included in the report that accompanies the House Agriculture Appropriations bill, including establishing a Soil Health and Greenhouse Gas Subcommittee under the National Agriculture Research, Education, Extension, and Economics Advisory Board, appropriating additional funding for USDA Climate Hubs, and directing the Economic Research Service (ERS) to conduct studies on the benefits of conservation and soil health practices and the long-term economic impacts of integrating livestock into cover cropping systems.

A FY 2021 agriculture and food systems programs appropriation chart and detailed breakdown of the bill is available here.

Next Steps

NSAC is hopeful that after the election the Senate will publicly release and mark-up their agriculture spending bill prior to negotiations over final allocations and decisions with the House. It is quite possible, however, that the Senate will skip that step all together and go straight to negotiations with the House over a final package of spending bills.

It is also very possible that finding agreement on all 12 appropriations bills during a lame-duck session of Congress after a November election that could precipitate dramatic changes in the balance of power could be illusive and instead lawmakers will pass another short or even long term full year CR.

Next calendar year the appropriations process will hopefully follow a path more akin to regular order. FY 2021 was the last year in which the Budget Control Act of 2011’s (BCA) threat of sequestration and automatic spending cuts applied to discretionary spending; meaning that for FY 2022 Congress will have full control over setting the 301(a) allocation for discretionary spending. However, the skyrocketing federal debt and increasing spending deficits will undoubtedly make that process difficult and messy. Unfortunately, mandatory sequestration on agriculture spending will continue unless Congress acts on the matter. For more information on the BCA and sequestration check out this previous NSAC blog.

One incredibly important issue related to FY 2022 appropriations process that NSAC will be watching closely is how 302(b) allocations are determined and whether or not agriculture spending sees any significant boost. This is critically important relative to addressing the climate crisis. A review of House-passed legislation (both appropriations bills and authorizing bills) in calendar year 2020, that includes significant investments in addressing climate change reveals a relative lack of investment in agriculture- and food systems-focused climate solutions, despite the fact that agriculture contributes 10 percent of GHGs in the U.S. and has the potential to contribute significantly to climate change mitigation and carbon sequestration efforts.

NSAC is very pleased that House appropriators were provided with a modest increase in their 302(b) allocation for FY 2021, as it allowed them to make some important investments in sustainable agriculture and food systems programs rather than cuts. However, the increase of $487 million above FY20 enacted level was constraining and limiting vis-a-vis the kind of climate change focused investments that are needed in the agriculture and food systems sector.

NSAC will be working to advocate for an increased 302(b) allocation for the agriculture spending bill commiserate with the critical role that agriculture can play in our country’s climate change mitigation and carbon sequestration efforts. Without increased investment in soil health initiatives, crop and livestock integration, agroforestry, and protecting farmland from development, agriculture will continue to be a major contributor to the climate crisis instead of being part of the solution. Farmers and ranchers are committed to being part of the climate solution, Congress must ensure that the tools, resources, and technical assistance that they need are available to them.

The most immediate way in which Congress can act is through providing increased investments in conversation programs and sustainable agriculture research and extension programs through the annual appropriations process, but such increased investment are only possible if the agriculture appropriations subcommittee is provided a funding allocation commiserate with the with the critical role that agriculture can play in addressing the climate crisis. 

Categories: Budget and Appropriations, Carousel, Commodity, Crop Insurance & Credit Programs, Conservation, Energy & Environment, General Interest, Local & Regional Food Systems, Nutrition & Food Access, Research, Education & Extension, Rural Development

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