Reduction in agricultural development funds likely

From Kentucky’s Legislative Research Commission

State and regional agricultural projects will likely have 36 percent less available state agricultural development funding this fiscal year because of the struggling economy, a state legislative committee was told yesterday.

Kentucky Governor’s Office of Agricultural Policy Chief of Staff Joel Neaveill told the Interim Joint Committee on Agriculture that the likely reduction in available Agricultural Development Fund dollars for state and regional investment follows a revision of Kentucky’s official revenue estimate for fiscal year 2012 by the Consensus Forecasting Group, an independent panel that forecasts the state’s revenue growth. The CFG revised the state’s revenue estimate for the current fiscal year last month in Frankfort.

The anticipated reduction in available state and regional ADF dollars for fiscal year 2012 would exceed a 24.6 percent reduction in ADF dollars for state and regional investments that Neaveill said occurred in fiscal year 2011.

County agricultural development funds will not be affected by any projected reduction in ADF funds, Neaveill told the committee when asked what investments would be affected by committee co-chair Sen. David Givens, R-Greensburg.

Funding for the ADF is provided by tobacco settlement dollars from a 1998 national tobacco settlement that included Kentucky and 45 other states’ Attorneys General. State General Fund money is not used to fund ADF projects, explained Neaveill.

The projected reduction was one of several issues raised by GOAP staff for legislative consideration during the upcoming 2012 Regular Session of the Kentucky General Assembly. Another issue, raised by GOAP Executive Director Roger Thomas, is the need for a permanent statutory change that would enable the Kentucky Agricultural Finance Corporation to provide an entity or individual with a low-interest loan greater than $1 million and up to $5 million. The change would do away with the current legislative practice of creating an exception during budget sessions, held every two years, to existing law that enables the KAFC to offer the larger loans.

Thomas said the exception to current law—which allows existing law to be “not withstood,” in bill drafting terms—has been approved by the General Assembly over the last three budget cycles. KAFC’s assets have grown to almost $40 million over the last four years, he explained.

Committee co-chair Rep. Wilson Stone, D-Scottsville, said he believes the requested change could be “a subject for discussion as the session unfolds.”

“I think (other factors) along with the fact that it just takes larger projects to have the kind of impact that you want to have is certainly a logical reason to make that increase,” Stone said.

Thomas also suggested that state lawmakers change the definition of “beginning farmer” in state law from the U.S. Department of Agriculture’s definition to the state’ s so-called “working definition” that Thomas said is more flexible.  He explained the change would allow loans to be made that are not possible under the USDA definition.

The GOAP would also like to continue Kentucky’s federally-funded On-farm Energy Efficiency and Production Incentives Program which has served nearly 200 recipients with federal stimulus dollars alone, Thomas said.