Strong Farmer Support for Payment Limits
Farmers and ranchers favor targeting farm payments to small farmers in new poll data

A 27-state poll of farmers and ranchers found very strong support for closing payment limitation loopholes and initiatives to strengthen rural communities and help small and beginning farmers.

The two policy options that drew the strongest agreement among all commodity program policy options in the survey were targeting payments to small farmers and eliminating the three entity rule. The three entity rule is used by mega farms to subdivide into several corporations and thereby avoid farm program payment limitations.

Support among farmers and ranchers for eliminating the payment limitation loophole scored higher than the importance placed on continued funding of farm program payments, including direct payments, counter cyclical payments, and loan deficiency payments.

Support for eliminating the three entity rule was nationwide. Even in the South, support for closing the loophole exceeded the importance placed on continuing commodity programs. Southern support for closing the loophole was greatest in Florida and Georgia. Midwestern support was greatest in South Dakota, Iowa, and Nebraska. Western support was greatest in Idaho and Montana.

Other views of farmers and ranchers on the farm bill include:

• Across the 27 states, the two top goals of producers for the farm bill are “enhancing small/beginning farmer opportunities” and “reducing dependence on non-renewable energy.”
• There is strong support among producers for efforts to start new businesses and create new jobs in rural areas. Most agreed that one of the objectives of the next farm bill should be to enhance rural economies.
• Farmers and ranchers support free trade agreements, but by far greater margins support addressing labor, environmental, and food safety standards in trade negotiations.
• By overwhelming margins, farmers and ranchers support mandatory country of origin labeling of food products (COOL). The strong support was consistent among all sizes of operations and all regions of the nation. There was also support for adoption of a mandatory animal identification system.
• Support was strong in every region for conservation programs that reward stewardship of working lands. Nationwide support for conservation on working lands was higher than support for commodity programs. It was exceeded only by support for disaster and insurance programs. In the North Central Region, however, the high levels of support for commodity programs also exceeded strong support for conservation on working lands.
• Three-fourths of producers support the Conservation Security Program that pays farmers and ranchers based on how intensively they manage their land to protect the environment. But support is cautious. Most would continue to limit the program to selected watersheds. Perhaps the limited support for nationwide enrollment reflects the administrative problems in the initial enrollments (see more on CSP implementation).

The poll was sponsored by the Farm Foundation and the National Public Policy Education Committee and conducted by the Extension Service in participating states. The complete report – The 2007 Farm Bill: U.S. Producer Preferences for Agricultural, Food, and Public Policy – can be found on our website or at www.farmfoundation.org .

Producers were polled in Alabama, Arizona, Colorado, Florida, Georgia, Idaho, Illinois, Iowa, Kansas, Maryland, Michigan, Missouri, Montana, Nebraska, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, South Dakota, Texas, Utah, Vermont, Washington, Wisconsin, and Wyoming.

Contact: Chuck Hassebrook, chuckh@cfra.org or 402.687.2103 x 1018 for information.

National Increase in Rural Child Poverty

New data released by the U.S. Census Bureau in August 2006, shows a significant and troubling increase in rural child poverty rates in the United States and nearly every state.

The data, which compares the 2000 Census and the 2005 American Community Survey, shows that 22.5 percent of rural children (age 18 and below) live in households with income below the official national poverty level. The figures in both surveys actually reflect poverty for the preceding year (1999 and 2004). The American Community Survey figures represent a 3.3 percentage increase since the 2000 Census.

The data also show that the rural child poverty rate increased from 2000 to 2005 in 41 of 50 states (with data from the District of Columbia and three states unavailable). In only six states did rural child poverty rates decrease from 2000 to 2005 – California, Connecticut, Georgia, North Dakota, South Dakota, and Wyoming.

Maine, North Carolina, Mississippi, Ohio, and Indiana witnessed the largest percentage point increases in rural child poverty rates from 2000 to 2005, all over five percentage points or more.

Five states – Mississippi, Louisiana, New Mexico, Arizona, and Alabama – had rural child poverty rates above 30 percent in 2005. Only Connecticut had a 2005 rural child poverty rate less than 10 percent (6.3 percent).

Rural child poverty rates in states we have analyzed in previous CFRA reports such as Trampled Dreams and Swept Away are:

The child poverty rate is a strong indicator of child well-being because, as the University of New Hampshire’s Carsey Institute points out in Child Poverty in Rural America, a report on these data, “poverty is closely linked to undesirable outcomes in areas such as health, education, emotional welfare, and delinquency. Changes in child poverty signal important changes in children’s quality of life and life chances.”

These data suggest that rural children in most places are falling further behind and that their quality of life and life chances are worsening. Their future and the future of rural America depends upon all of us to discover solutions.

Contact: Jon Bailey, jonb@cfra.org  or 402.687.2103 x 1013 for more information.

Showing Senior Leadership Rurally
Americans 85 years old and above are the fastest growing population group, yet are among the least understood, even in rural areas

Youth, economics, school, and church are just a few of the driving forces behind community development in small rural communities. What about the senior citizens of the community? Who are they? Do they have a voice in the community?

Older Americans are living longer and are predominantly located in the South and the Midwest. Twenty-eight percent of all older Americans, citizens aged 60 and older, live in these two areas.

The fastest growing population group is those people 85 years and older, and it is expected to continue to grow faster than any other age group. Currently at four million, estimates predict the 85 and older group could rise to 19 million by 2050. What does that mean for rural communities and the surrounding areas?

More and more older citizens are staying on farms or in small rural communities. Unfortunately, in most cases, necessity has kept an aging population working on the farm. Because of this phenomenon, community development must understand the role of the senior citizen in keeping the community vibrant. These individuals have a lot to offer in terms of leadership and a skilled volunteer base.

Community leaders often have difficulty understanding senior citizens and their values. Seniors have more in common with the youth of a community than anyone else. You will often hear this phrase coming from the youth and the elderly, “We aren’t understood!” Why is that?

To understand the two older generations (those born 1901 to 1931 and those born from 1932 to 1944), we must understand what shaped their values. The older groups were shaped by such events as the Titanic sinking, the zipper, and World War I. The slightly younger groups were shaped by such things as the Great Depression, World War II, and race riots.

During the next couple of months we will look at community development and how to work with the elderly of both age groups to help the region prosper.

Contact: Michael L. Holton, michaellh@cfra.org or 402.687.2103 x 1015 for information.

Corporate Farming Notes
Smithfield Foods proposed merger with Premium Standard Farms pummels market competition; discussions surround Iowa zoning

>> Smithfield Foods, the nation’s largest pork producer and packer, recently announced plans to acquire Premium Standard Farms, the second largest pork producer and sixth largest packer. According to Successful Farming, Smithfield owns approximately 800,000 sows and Premium Standard owns 221,000. A merger would bring Smithfield’s holdings to over one million sows, at least 20 percent of U.S. hog production, and 31 percent of U.S. pork packing.

Senator Tom Harkin called on the Department of Justice to thoroughly review whether Smithfield’s merger would violate anti-trust laws and what impact the merger would have on pork producers, consumers, and hog markets.

This merger will diminish market competition. Economists have repeatedly stated that when four firms control over 40 percent of a market, competitiveness declines. Currently, the top four firms control 50 percent of hog production and, post-merger, the top four firms will control approximately 70 percent of pork packing.

“This merger once again points to the need for federal limits on packer ownership and captive supplies of livestock and underscores the critical need for full and effective enforcement of the Packers and Stockyards Act,” Senator Harkin declared. We agree. In a world where packers own all of the livestock, what hope is there for farmers and ranchers?

>> Recently, Jeff Vonk, Director of the Iowa Department of Natural Resources, urged the Hardin County Board of Supervisors to lobby the legislature for zoning authority over new livestock facilities. He’s right of course, giving democratically elected county boards the authority to foster livestock production that reflects the desires of the people who live there is better than current law. In fact, it would also be better than giving blanket veto authority to Director Vonk, as was attempted administratively in August.

However, neither Governor Tom Vilsack nor Director Vonk has gone to the mat for legislation giving counties back the local control that was stripped from them in the 1990’s. And their opponents in the legislature have done nothing more than hamstring Vilsack’s efforts. They have offered no alternatives and no compromises, such as reasonable veto criteria limiting but not negating regulatory authority over siting livestock facilities.

Contact: John Crabtree at 402.687.2103 x 1010 or johnc@cfra.org for more information.

Special Interests Dominate Regional Field Hearings

Over the summer, both the House and Senate Agriculture Committees held hearings throughout the country with the intention of receiving citizen input on the expected 2007 farm bill. The Senate held eight regional hearings while the House held 11, primarily in states with substantial agriculture industries. As one might expect, the hearings were, without exception, carefully scripted and excruciatingly dull affairs all around.

However, by all indications our elected representatives give serious weight to testimony of those present, so we are often forced to address the issues prominently mentioned by the carefully screened witnesses. But it is far more interesting and revealing to note the surprisingly honest recitation of priorities that came from the mouths and pens of those testifying.

At the Grand Island, Nebraska, hearing, each of the first four panelists (representing corn, soybean, wheat, and sorghum producers) expressed strong support for current commodity programs and expressed complete opposition to any reduction in commodity payments in order to fund conservation, rural development, and beginning farmer initiatives.

At best, this is a naïve political outlook that assumes an unlimited budget for the next farm bill. At worst, it displays both greed and a willingness to sell out the future of our rural communities, our land, and our future farmers to provide corporate mega farms with the biggest payday possible.

The 2007 farm bill should strengthen our communities, encourage stewardship of our natural resources, and focus on investing in the future of rural America as a whole. Unfortunately, our elected representatives and many rural leaders appear to be focused simply on gaining the largest number of dollars possible with little attention paid to how this bill will affect the people and places they claim to represent.

We need a farm bill guided by a vision for all of rural America, not one driven by the special interest groups that dominated the discussion of this summer’s congressional hearings.

Contact: Dan Owens, dano@cfra.org or 402.687.2103 x 1017 for more information.

Report Examines Implementation of Conservation Security Program
Farmers and ranchers share their experiences and opinions on improving the CSP in the Center’s new report: Lean and Green

The Conservation Security Program (CSP) has experienced three sign-ups to date. Because we support the CSP and believe it holds great promise, we think it is important to assess the administrative implementation of the program and ensure that it is implemented correctly.

Our report, Lean and Green: Effective Implementation of the CSP, provides an assessment of the program by looking to farmers and ranchers to share what they have learned through their experiences. The goal of this report is to take those lessons and inform policy decisions to improve the implementation of the program.

We gathered information two ways. First, we operated a Conservation Hotline that fielded calls from farmers and ranchers looking for assistance. Second, we interviewed farmers and ranchers who experienced the sign-up process.

Our research showed that the CSP has a lot of strengths and is seen as the most innovative conservation program to come along. But many improvements are needed to make the program function properly.

Farmers and ranchers by and large believe the strength of CSP is that it rewards conservation efforts rather than production. Farmers have implemented certain conservation practices despite the fact it affected their ability to reap additional commodity program dollars. They believe CSP is the program to reward them for those efforts. As one farmer indicated, “It was nice to have a third party verify that our practices made sense, and it gave credibility to our way of farming.”

On the flip side are the improvements needed for CSP to function as we believe it should. The following is a brief synopsis of what we learned:

• The program needs proper funding.
• There appears to be a bias towards no-till farming systems due to the Soil Conditioning Index (SCI) used to determine eligibility.
• The SCI really disadvantages certain soil types as well, ones where it is impossible to build organic matter irrespective of farming practices.
• The program is very complex and sign-ups seem rushed.
• The nature of declining enhancement payments is antithetical to rewarding conservation.
• Many farmers believe on-farm research and demonstration should be rewarded and will only help improve and expand conservation.
• One prominent issue was the arbitrary disqualifying measures being used to narrow program participation, such as the requirement of soil tests on all fields, which was serving as a disadvantage to organic farmers.

The full report explores these issues more thoroughly. And we hope it will encourage the Natural Resource Conservation Service to make needed program improvements to allow the CSP to really “reward the best and motivate the rest.” The full report is coming soon to our website .

Contact: Traci Bruckner, tracib@cfra.org or 402.687.2103 x 1016 for more information on the Conservation Security Program.

2006 Value Added Producer Grant Awards

USDA recently released the recipients of the 2006 Value Added Producer Grants, and the Center for Rural Affairs and Nebraska did very well. A total of 185 grants were awarded nationwide providing $21,203,723 in value added planning or working capital grants.

Nebraska ranked number one in the number of grants approved (18), but ranked 7th in dollar amounts ($1,217,932). The six states getting more funding are listed in the table below.

The Center helped prepare a total of five proposals, and all five received funding. Projects involving the Center are as follows (alphabetically):

• Family Farmers and Ranchers Meats: $32,215 Planning Grant. FFARM will assess the feasibility of marketing live cattle and hogs raised naturally, without the use of antibiotics or growth implants. The animals are also raised humanely. FFARM is based in Lyons, Burt County.
• Heimes Renewable Energy: $48,400 Planning Grant. Danny Heimes will assess the feasibility and develop a business plan for using wind to generate electricity and burn corn as a supplemental source of electricity when the wind is not sufficient to meet the power demand. Heimes Renewable Energy is based in Hartington, Cedar County.
• Kloppenborg Quail and Chukar: $29,500 Planning Grant. Martin Kloppenborg is leading an effort to assess the feasibility of and develop a business plan for marketing quail and chukar products, including live birds, meat, and eggs. Kloppenborg Quail and Chukar is based in Emmet, Holt County.
• Many Rivers Producer Cooperative: $31,500 Planning Grant. Konnie Frederick is one of the leaders of an emerging cooperative in Nebraska. Many Rivers Producer Cooperative will assess the feasibility and develop a business plan for marketing goat and sheep products and establishing a processing plant in Nebraska for goats and sheep. The cooperative is based in Randolph, Cedar County.
• Rut’s Honey: $72,400 Working Capital Grant. Mike Rutledge will lead the effort to develop the emerging market for specialty honey products – especially “honey buttur.” The grant will be used to pay for working capital expenses associated with marketing honey buttur and other products (including beeswax and spun honey). Rut’s Honey is based in Plainview, Pierce County.

Note the diversity of awards – all value added producer projects are eligible for funding under the VAPG program. We expect the 2007 round of value added grants to be made available in December of this year.

Contact: Mike Heavrin, mikeh@cfra.org or 402.687.2103 x 1008 for information.

The 2006 Nebraska Rural Poll through the Eyes of a Community Developer
Residents of Nebraska’s smallest communities feel positive about living there, but fewer express positive feelings about changes that have taken place the past year

The third installment of the 2006 Nebraska Rural Poll released in September contains data on Nebraskan’s view of life in rural communities. The report tabulated 2,482 responses to questions disseminated earlier in the year. It has been referred to as a mirror reflection of our attitudes and trends towards our future. What clues did the 2006 report of the poll bring?

Recent Census data shows that many communities in Nebraska have experienced growth. What is producing the change from the doom and gloom statistics when the poll first started 10 years ago? Why are people flocking to some of Nebraska’s small communities? More importantly, what are the feelings of the residents towards the community’s growth or lack of growth?

The Nebraska Rural Poll is like a mirror to the soul of all of us who live in rural Nebraska. It sees statistically what those of us in community development have been working with.

Small towns have genuine opportunity and potential to become homes to many wishing to escape the urban day-to-day struggles of living. Amenities are abundant, and, when coupled with social acceptance, these can create a wonderful place to live.

But what happens when people return to live in the communities they remembered growing up? What happens when small communities start to experience growth? How do their attitudes change?

Nebraskans living in larger communities are more likely to say their community has changed for the better during the past year. Thirty-nine percent of those living in or near communities with populations of 10,000 or more consider their community better than last year. Only 24 percent of Nebraskans living in towns of less than 500 say their community has changed for the better.

The poll also measured how rural Nebraskans felt about their community. The opposite result occurred when Nebraskans rated their community. Of residents living in communities with less than 500 people, 46 percent expressed positive sentiments towards their community, stating there is no other place that can compare with my community.

Only 27 percent living in or near communities with populations of 5,000 or more agreed with the same positive statement. This leads to the conclusion that there is a social bond that begins to be more difficult to identify with in the larger communities. This should come as no surprise to anyone.

For a more complete look at the statistics released with the 2006 Nebraska Rural Poll third report, go to the website: http://cari.unl.edu/ruralpoll/06community.pdf . 

Contact: Michael L. Holton, michaellh@cfra.org or 402.687.2103 x 1015 for details.

Notables this Month

COLLABORATIVE COMMUNITY SUPPORTED AGRICULTIRE -- Iowa State Univeristy has released a new report, The Role of Collaborative Community Supported Agriculture: Lessons from Iowa. It found the collaborative CSA served as a business incubator for new growers; helped existing growers expand and diversify; provided workforce development; and offered residents access to healthy, delicious food while supporting their local economy and community. For more, see www.ncrcrd.iastate.edu/projects/csa/index.html.

PLANT BREEDING WORKSHOP -- National Workshop on Plant Breeding: A Vital Capacity for U.S. National Goals, February 8 and 9, 2007, in Raleigh, NC. Dr. Gale Buchanan, USDA Undersecretary for Research, Extension, and Economics, will be a guest speaker. The workshop will establish the Plant Breeding Coordinating Committee as a long-term forum for leadership regarding issues, problems, and opportunities of strategic importance to the public and private-sector U.S. national plant breeding effort. Find out more at http://www.plantbreedingworkshop.ncsu.edu.

RENEWABLE ENERGY PUBLICATION -- The College of Agriculture at the Montana Agriculture Experiment Station sends word of a new renewable energy publication. The Biobased Products Institute funded the research and resultant publication: Oilseed, Biodiesel and Ethanol Subsidies & Renewable Energy Mandates: US Federal & Selected State Initiatives. It is available on the web at: www.ampc.montana.edu/policypaper/policy16.pdf .

WORKSHOP SHOWS OFF MARKETING INITIATIVES -- The second annual Leopold Center Marketing Initiative Workshop will be held Nov. 6, 2006 at the Gateway Conference Center in Ames, Iowa. Rich Pirog, Director of Research Programs, calls this “A great opportunity to join a dynamic learning community of farmers, educators, researchers, and others who are interested in new market strategies for food and fiber enterprises.” This event will feature short presentations in concurrent sessions by leaders of more than 25 projects currently or recently funded by competitive grants from the Leopold Center. See a brochure and register for the workshop at http://www.leopold.iastate.edu/workshop.htm .

Poll Shows Need for Citizen Action

A 27-state poll of farmers and ranchers on the farm bill demonstrates that the organizations that are supposed to represent farmers and ranchers aren’t.

The most striking examples are farm program payment limitations and mandatory Country of Origin Labeling. These measures draw strong support from farmers, but ire and opposition from national agricultural commodity groups.

Meanwhile, there really is no extensively organized group speaking for the concerns of rural people who don’t farm but do care about the future of their community. It’s time we change that. The voices of rural people are not being heard. And it’s up to each of us to do something about it.

For farmers and ranchers, part of the solution is to take control of farm and commodity organizations. That is starting to happen.

Leaders like Mike Korth of Randolph, Nebraska, have championed resolutions that have gained the support of the Nebraska Farm Bureau and Nebraska Corn Growers Association for payment limitations. To learn more about how Mike achieved this success, contact him at 402.337.0079.

Other farmers are undertaking similar efforts in states as diverse as Georgia, Oklahoma, Illinois, and Minnesota to put farm organizations where they belong: on the side of farmers.

If you are not a farmer, or even if you are, you can assist in a second way. Help us build our National Rural Action Network to provide an organized voice for rural people to take control of their future. The Network will address the concerns of rural people who care about the future of their community – their small towns, family farms and ranches, small businesses, and families.

Our goal is to build a nationwide network of tens of thousands of people speaking out on critical rural issues before Congress. The only way we can succeed in this essential effort is with your help in reaching out to friends, neighbors, and relatives.

If you are on the Internet, go to our Strengthen Rural America Petition. Endorse it and forward it to 20 people on your email contact list or Christmas card list.

Ask them to sign up and forward the petition to 20 people they know. Or call John Crabtree, 402.687.2103 x 1010, and he’ll help you send a letter to friends and acquaintances asking them to join this vital effort.

Democracy is not a spectator sport. It works only when people roll up their sleeves and make it work. If we do that, we will create a better future for all of Rural America.

Agree or disagree? Send your opinions or comments to Chuck Hassebrook, 402.687.2103 x 1018 or chuckh@cfra.org.

FEATURE ARTICLE:

SOS Amendment No Lifesaver for Nebraska

Greater reliance on property taxes is what faces Nebraska voters as they consider their vote on Amendment 423, the so-called SOS initiative. Along with voters in Maine and Oregon, Nebraskans will choose in November whether to constitutionally limit state spending.

But for violations of the law, several more states would be voting on identical state spending limitation initiatives. Courts and state officials in Michigan, Missouri, Montana, Nevada, and Oklahoma found that state laws were violated in enough cases as to render the number of initiative signatures insufficient or the initiative process tainted.

While three states spread across the nation voting on the same issue does not seem odd, the fact that three states with different political climates, economies, and state budget circumstances are voting on identical initiative language is representative of a very disturbing nationwide trend – the role out-of-state interests and big money are increasingly playing in the traditional grassroots nature of state popular initiative efforts.

OUT-OF-STATE POLITICAL INTERESTS KNOW BEST?
Each of these state initiatives – with nearly identical language – found their place before voters based on the actions by a chain of front organizations funded by New York City real estate investor Howard Rich. Rich has long been involved in libertarian and anti-tax and anti-government organizations.

He is on the Board of Directors of the Cato Institute (a leading libertarian public policy research organization) and the Board of Directors of the Club for Growth (a political advocacy organization that favors “cutting and limiting government spending”).

Rich is also Chairman of the Board of Directors of Americans for Limited Government, an Illinois-based organization that filed and sponsored the Nebraska initiative.

Data from the Ballot Initiative Strategy Center shows that Americans for Limited Government funneled money to several front groups connected with Rich – U.S. Term Limits (of which Rich is president), Legislative Education Action Drive, Club for Growth, America At Its Best, Fund for Democracy, and Montanans in Action. In total, public records indicate over $4.1 million went from Americans for Limited Government to these organizations and then to state spending initiative efforts.

Nebraska records, for example, show that to date almost all of the funding for the Nebraska state spending initiative came from America At Its Best (based in Idaho), who in return report nearly all their funding from Americans for Limited Government. Rich and his fellow extremists have nationalized the state initiative process to serve their political aims.

TAXPAYER BILL OF RIGHTS (TABOR) BASICS
Each of these state initiatives is essentially a clone of Colorado’s TABOR (Taxpayer Bill of Rights) initiative adopted in 1992. Each TABOR initiative is based on the following three elements:

• A constitutional amendment;
• Restricts revenue or expenditure growth to the sum of inflation plus population change; and
• Requires voter approval to override the revenue or spending limits.

While each state initiative has nearly identical language, we will focus primarily on Nebraska’s SOS (Stop Overspending) initiative, Amendment 423.

THE COLORADO EXAMPLE
Colorado – the only state with a state spending restriction like what is proposed in the initiatives on the ballot in Nebraska, Oregon, and Maine – is an example of what may occur if a TABOR initiative is adopted:

• Colorado declined from 35th to 48th in the nation in K-12 spending as a share of personal income.
• Colorado now ranks 48th in higher education funding as a share of personal income – down from 35th in 1992.
• High school graduation rates in Colorado have declined since 1992.
• Between 1991 and 2004 – a period in which the percentage of children who are uninsured declined nationally – the proportion of low-income children who lack health insurance in Colorado doubled. Colorado now ranks last in the nation for children who are uninsured.
• Childhood immunization rates in Colorado are the lowest in the nation.
• Colorado declined from 23rd to 48th in the nation in access to prenatal care.
• Colorado has eliminated its mental health program in youth corrections.
• Colorado has eliminated its affordable housing loans and grants program.
• Colorado laid off nearly half of its probation officers in 2002 due to funding shortages.

The impact on public services, schools, and highways became so severe that in 2005, Colorado voters decided to suspend its TABOR law for five years.

INFLATION + POPULATION GROWTH = A RECIPE FOR DISASTER
The primary flaw in the TABOR proposals is its simplistic formula – state expenditures are limited to inflation plus population growth in the previous year. It sounds reasonable, but in reality escalating costs for health care and prisons will take most of the money and force cuts in education and other vital services and investments. The ultimate result will be higher property taxes as schools and local governments make up for reduced state aid the only way they can – by raising property taxes.

This simplistic formula does not account for the fact that many of the services state government provides are not bound by a general inflation rate. For example, much of government spending goes toward health care. States are obligated to provide a Medicaid program that is often among the largest (or the largest) program in the state budget. Health care in general and Medicaid in particular have in recent years grown at a significantly greater rate than inflation – as anyone paying health insurance premiums is aware. Education, another major portion of every state budget, has also grown at a rate exceeding inflation.

Population growth is also an artificial constraint. Growth rates of certain segments of the population – often those most in need of state government services or those for which state government must expend funds for the good of society – are significantly greater than population growth as a whole.

Nationally, from 1990 to 2002, state prison population grew by 83 percent, disabled children in schools grew by 35 percent, and the number of elderly and disabled persons on Medicaid grew by 70 percent, compared to an overall population growth of 15.4 percent during the same period. Over the next 40 years, it is estimated that the elderly population will grow at twice the rate of the general population.

An artificial, rigid barrier such as that proposed by the pending TABOR initiatives will crowd out investments for everything but those services with higher than average spending increases and those items related to rapidly growing populations. Faced with limits, states will have no choice but to limit investments in higher education, K-12 education, health care for low and modest-income children, and all other investments beneficial to rural Nebraska – highways and roads, business development, and agricultural programs.

The simple and reasonable formula is anything but – it is an extreme reaction that ignores the realities of what state government does and how state government invests in the protection and development of all.

CONSEQUENCES FOR NEBRASKA
Examples of what TABOR would do in Nebraska include:

>> Increased reliance on property taxes. SOS applies only to state government. If this law had been in place over the past 10 years, the Nebraska Legislative Fiscal Office estimates the state’s budget would have been $643 million less in 2006, resulting in a reduction of more than 60 percent in state aid to schools and local governments. (We estimate a total decrease in state spending of $2.3 billion and a total decrease in aid to schools and local governments of $831 million over the entire 10-year period had SOS existed in Nebraska.)

The consequences would be reduced services, fewer schools in rural communities, and/or an increased reliance on Nebraska’s already high property tax. In 1998 when Nebraska rejected a similar spending limitation (Amendment 413), we found that total tax burdens would increase for low and middle-income Nebraskans and for farmers and ranchers because of an expected increased reliance on local property taxes.

>> Increased reliance on fees and tuition. As state spending is limited, there will be a greater reliance on fees and tuition to make up funding shortfalls. This was the experience in Colorado. Increases in program fees would be detrimental to Nebraska’s farmers and ranchers, and an increased reliance on tuition and fees in Nebraska’s public colleges and universities would further place higher education out of the reach of many families and students. Both would be detrimental to the development of Nebraska’s economy and human capital.

>> Inability to invest in new priorities. The rigid limitation of SOS’ formula-based budgeting would generally prohibit investing in any new priorities or programs embraced by the people. Education initiatives, tougher corrections policies, enhanced highway construction, new economic development programs – all are examples of new priorities that could not be accomplished without flexible budgeting. SOS’ rigid limits also limit the state when expensive federal mandates requiring spending for items like education (No Child Left Behind, for example) and security come from Washington.

These are but a few examples of what could happen if Nebraska adopts Amendment 423 and if other states adopt their TABOR initiative. The Center for Rural Affairs has joined the Nebraskans for the Good Life Coalition in opposition to Amendment 423.

Please visit often before November to see more analysis of Amendment 423 and its potential impact on Nebraska and Nebraskans. Citizens in other states – be on guard as well.

Contact: Jon Bailey, jonb@cfra.org or 402.687.2103 x 1013 for more information.

Editor: Marie Powell, mariep@cfra.org