Farm Bill Primer: Budget Issues

Updated April 26, 2018 Farm Bill Primer: Budget Issues Farm Bills from a Budget Perspective Congress may soon consider a new farm bill, because the 2014 farm bill (P.L. 113-79) generally expires in FY2018. From a budgetary perspective, many programs are assumed to continue beyond the end of the farm bill, and that provides funding for reauthorization, reallocation to other programs, or offsets for deficit reduction. There are two ways to provide farm bill funding: 1. Mandatory spending. A farm bill authorizes outlays and pays for them with multiyear budget estimates when the law is enacted. Budget enforcement is through “PayGo” budget rules and “baseline” projections. 2. Discretionary authorizations. A farm bill sets the parameters for programs and authorizes them to receive funding in subsequent appropriations but does not provide or assure actual funding. Budget enforcement is through future appropriations and budget resolutions. Because mandatory programs often dominate farm bill policy and the debate over the farm bill budget, the rest of this document focuses on mandatory spending. Assistance Program ($664 billion). The remaining $203 billion baseline is for agricultural programs, mostly in crop insurance, farm commodity programs, and conservation. Other titles of the farm bill contribute less than 1% of the baseline, some of which are funded primarily with discretionary spending. This is the benchmark of available funding from which the House and the Senate may write bills for a new farm bill in 2018. Figure 1 shows the current CBO baseline for farm bill programs over the next 10 years. Figure 2 illustrates the same baseline on an annual basis. Table 1 adds detail at the program level for the farm commodity programs, conservation, trade, and miscellaneous titles. Figure 1. Farm Bill Baseline for Mandatory Programs 10-year projected outlays, FY2019-FY2028, billions of dollars Importance of Baseline to the Farm Bill The Congressional Budget Office (CBO) develops the budget baseline under various laws and follows the supervision of the House and Senate Budget Committees. The CBO baseline is a projection at a particular point in time of future federal spending on mandatory programs under current law. The baseline is the benchmark against which proposed changes in law are measured. When a new bill is proposed that would affect mandatory spending, the cost impact (score) is measured in relation to the baseline. Changes that increase spending relative to the baseline have a positive score; those that decrease spending relative to the baseline have a negative score. Source: CRS, using CBO April 2018 Baseline (unpublished). Figure 2. Farm Bill Baseline for FY2019-FY2028 Annual fiscal year projected outlays, billions of dollars Most of the major farm bill provisions such as the farm commodity programs and nutrition assistance have baseline. However, 39 programs that were authorized in the 2014 farm bill with mandatory funding do not have a continuing baseline (see CRS Report R44758, Farm Bill Programs Without a Budget Baseline Beyond FY2018). CBO’s April 2018 Baseline The mandatory spending baseline for farm bill programs contains $867 billion over FY2019-FY2028, 77% of which is in the nutrition title for the Supplemental Nutrition Source: CRS, using CBO April 2018 Baseline (unpublished). Farm Bill Primer: Budget Issues Table 1. Mandatory Farm Bill Programs with Baseline Projections 10-year projected budget outlays, FY2019-FY2028, millions of dollars 2014 Farm Bill Title and Program FY19-28 baseline Title I: Farm Commodity Programs 2014 Farm Bill Title and Program FY19-28 baseline Title III: Trade Price Loss Coverage 43,921 Market Access Program 2,000 1,544 Agricultural Risk Coverage 8,529 Export Donations Ocean Transportation Disaster Programs 3,868 2014 programs without continuing baseline Other (incl. net interest, operating expenses) 2,723 Subtotal Dairy 1,624 Marketing loans, loan deficiency payments 486 Subtotal 61,151 Title II: Conservation Title IV: Nutrition (SNAP) Title V: Credit (receipts to FCS ins. fund) 604 Conservation Security Program 17,729 Title IX: Energy (incl. REAP) Environmental Quality Incentives Program 16,697 Title X: Horticulture (incl. SCBG, PPDM) Agricultural Conservation Easement Program 2,597 Title XI: Crop Insurance Regional Conservation Partnership Program 1,078 Title XII: Miscellaneous Noninsured Assistance Program Agricultural Management Assistance 97 Other Programs repealed in 2014 and user fees 10 Subtotal -40 Announced sequestration through 2018 -489 Subtotal 59,754 -4,558 Title VII: Research (incl. SCRI) Title VIII: Forestry Emergency Forestry Conservation Reserve 663,828 168 21,097 978 3,624 Title VI: Rural Development Conservation Reserve Program CRP Technical Assistance 80 Total 10 612 1,547 78,037 2,229 195 2,423 867,200 Nutrition 663,828 Non-nutrition 203,372 Source: CRS, using CBO, “Baseline Projections for Selected Programs,” April 2018; and unpublished CBO tables. Notes: Projected outlays are the fiscal measure used for the enforcement of certain budgetary rules. Outlays are the payments that occur under a given budget authority that is provided in statute, and may differ in timing from budget authority because the outlay may occur at a different time than when the contractual obligation is incurred. SNAP=Supplemental Nutrition Assistance Program, FCS=Farm Credit System, SCRI=Specialty Crop Research Initiative, REAP=Rural Energy for America Program, SCBG=Specialty Crop Block Grants, and PPDM=Plant Pest and Disease Management. CRS Products CRS In Focus IF10780, Farm Bill Primer: Programs Without Baseline Beyond FY2018. CRS Report R44758, Farm Bill Programs Without a Budget Baseline Beyond FY2018. CRS In Focus IF10187, Farm Bill Primer: What Is the Farm Bill?. Jim Monke, Specialist in Agricultural Policy IF10783 Farm Bill Primer: Budget Issues Disclaimer This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress. Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the United States Government, are not subject to copyright protection in the United States. Any CRS Report may be reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you wish to copy or otherwise use copyrighted material. | IF10783 · VERSION 6 · UPDATED