On February 12, the Office of Management and Budget (OMB) released the details of the proposed budget for fiscal year 2019 (FY19) of the Trump administration, the second since the current President took office. Overall, the budget proposes to spend $4.4 trillion in the upcoming fiscal year, generating a projected budget deficit of $984 billion, a 34 percent increase over the size of the deficit in FY17. These figures do not include the cost of the Bipartisan Budget Act of 2018, which I described in a blog posted on February 20th, which will substantially increase the deficits for both FY18 and FY19.
This increase reverses the trend from last five years of the Obama administration, which saw the annual on-budget deficit decline from $1.14 trillion in fiscal year 2012 to $620 billion in fiscal year 2016, a 46 percent reduction over five years. This year’s deficit increase comes largely as a result of OMB’s projected slowing of the growth in federal revenues due to the passage of the Tax Cuts and Job Act of 2017 last December.
With respect to funding for agricultural programs, the proposals can be divided into two components--the first is how much they are proposing to spend on discretionary programs for the upcoming fiscal year operated by the various agencies at the U.S. Department of Agriculture (USDA), such as rural development, international food aid, farm credit, agricultural research, fighting forest fires, and the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), and paying the salaries and expenses of the people who work at USDA. The second component includes proposed cuts to mandatory spending under USDA’s jurisdiction that includes farm bill programs such as the commodity and crop insurance programs, conservation, trade promotion, and nutrition assistance. This blog will focus on the proposed cuts to discretionary accounts--the sizeable proposed cuts to mandatory farm programs, which would occur over the next ten years, will be addressed in a later blog.
This budget proposes $18 billion in budgetary authority in FY19 for these purposes, a 28 percent reduction from FY17 levels. These include cuts in salary and expenses for both federal and non-federal (state and county FSA offices) for the Farm Service Agency (FSA), reducing total staff years for the agency by 20 percent as compared to 2017 staffing levels. Program levels for FSA farm loan and grant programs would be cut by five percent, mainly in the guaranteed farm operating loan category.
Funding for staffing at the Risk Management Agency (RMA), which oversees the federal crop insurance program, would also be cut, by 20 percent, leading to a 17 percent decline in RMA staffing. Funding at the Natural Resources Conservation Service (NRCS) would be reduced by 35 percent, with the Small Watersheds program being totally eliminated and funding for conservation operations, which provides conservation technical assistance to farmers not participating in programs cut by 23 percent.
Some of the staff-years lost at both FSA and RMA, as well as NRCS, are proposed to be transferred to the new Farm and Conservation Program (FPAC) Business Center that Secretary Perdue wants to set up. The Business Center concept is intended to consolidate finance, budget, information technology, human resources, and other enterprise-wide activities within the newly formed FPAC mission area. It is not clear what this proposal will mean for consolidation of county and state FSA and NRCS offices, and regional RMA offices.
Proposed funding for the four USDA research agencies would fall by 15 percent, with the biggest cuts coming at the Economic Research Service (ERS), by 48 percent, and at the Agricultural Research Service (ARS) by 21 percent. This total includes funding for intramural (ie., in-house) and extramural (mostly at land-grant universities) research, agricultural extension and education, and upgrading agency buildings and facilities.
With respect to rural development, the FY19 budget would propose cutting the program level for rural development loans and grants by $1.4 billion, or by 16 percent as compared to FY17 levels. This would consist of zeroing out authority to provide guaranteed loans for rural electrical utilities and water and wastewater systems, and ending more than $500 million in grants authority for the latter program. It would also eliminate funding for all programs under the Rural Business-Cooperative Service, most notably the Business and Industry guaranteed loans and Value-added Producer Grant Programs.
Funding for WIC would decline by 9 percent, but USDA asserts that level would serve all eligible participants in the program, based on declining birth rates in the United States. The President’s budget also once again proposes to eliminate funding for both the McGovern-Dole international school feeding program and the Title II ‘Food for Peace” program, instead planning to provide all such assistance through enhanced funding for the cash-based Emergency Food Security Program. However, combined FY19 funding for these programs would be reduced overall by 43 percent as compared to 2017.
Funding for the U.S. Forest Service would be cut by 15 percent, primarily by cutting funding for maintaining and upgrading USFS facilities around the country. The Animal and Plant Health Inspection Service (APHIS) would see its funding cut by 27 percent, with the main cuts coming in funding to address specialty crop pests, wildlife damage management, and avian health.