In the debate over the farm bill, there’s more at stake than agricultural issues.

In the debate over the farm bill, there’s more at stake than agricultural issues.

It contains funding for rural development loans and grants provided through the U.S. Department of Agriculture.

Reducing those dollars would start taking away small-town assets, such as nursing homes, hospital expansions, access to affordable housing, wastewater infrastructure and business development, according to “Blueprints for Rural Progress,” the latest report from St. Paul-based think tank Minnesota 2020.

Congress is rewriting the farm bill, which includes rural development funding, in a climate of sequester-induced, across-the-board budget cuts, according to MN2020.

Depending on how deep rural development cuts are in the next farm bill, Minnesota communities will have a tougher time financing these vital programs, the group says.

Douglas County may feel the impact. Between 2009 and 2012, it received, on average, $1 million in grants and $16 million in loans and loan guarantees through rural development programs, according to Joe Sheeran, MN2020 communications director.

The Alexandria Opportunity Center, for example, received $150,000 through a revolving loan fund that allowed it to expand and renovate its building.

These potential budgeting issues come after a decade of already dwindling USDA Rural Development resources, said Lee Egerstrom, a MN2020 fellow and author of the report.

Annual appropriation cuts and sequestration have reduced Minnesota development staff by 32 percent from 2003 to 2013.

Minnesota’s annual federal development dollars fluctuate greatly, depending on state needs, funding availability and a number of other factors.

According to Minnesota USDA Rural Development, the state uses $630 million to $760 million in annual grants and loans. The money typically helps the state’s smallest communities, most of which lack the tax base and population to afford infrastructure upgrades and development projects on their own, Egerstrom said.

Funds cover programs in seven categories: business assistance, energy upgrades, low-income housing, community facilities (nursing homes, medical units, community center, etc.), water and sewer, utilities and community/regional development.

“These dollars aren’t handouts, but investments in rural communities that return dividends in the form of business growth, expanded access to health services and population stability,” Egerstrom said.

His report makes the following policy recommendations:

-- Policymakers should consider the value USDA Rural Development programs produce for rural economies when evaluating farm bill funding.

-- Rural communities should prepare for shifts in funding and work with congressional officials to reduce their negative impacts.
-- State policymakers must prepare to counteract across-the-board federal cuts by increasing capital bonding in the 2014 legislative session, with particular attention to Greater Minnesota projects.