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Fed cuts will hurt rural Minnesota

The Farm Bill now being considered by the U.S. House isn’t all about farm programs and food stamps.

It also funds rural development programs, and that money will be missed more than most people realize if it goes away, according to St. Paul-based think tank Minnesota 2020.

In any given year, Minnesota uses between $630 million to $760 million in annual grants and loans, according to Minnesota’s USDA Rural Development office.

Here are a few examples of local businesses that benefitted from a rural development loan pool operated by the City of Detroit Lakes.

Great North Pizza received start-up money through USDA Rural Development revolving loan funds.

Union Central Senior Housing used $250,000 in USDA Rural Development revolving loan funds to convert the former Washington School into a 30-unit assisted living facility.

Northland Portable Welding used USDA Rural Development revolving loan funds to rehabilitate and expand an old property for their new headquarters.

Reduce USDA Rural Development dollars and you start taking away small town assets, such as nursing homes, hospital expansions, access to affordable housing, wastewater infrastructure, and business development, according to Minnesota 2020’s latest report, Blueprints for Rural Progress.

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

Depending on how deep Rural Development cuts are in the next farm bill, Minnesota communities will have a tougher time financing these programs.

Potential budgeting issues come after a decade of already dwindling USDA Rural Development resources.

Annual appropriation slashes and sequester have reduced Minnesota development staff by one-third (32 percent) from Fiscal Year 2003 to 2013.

More than 7 percent of USDA Rural Development staff funding was lost just this year due to sequester cuts.

“As staff is cut we start to eliminate the ability to do outreach to communities to let them know programs exist and dollars are available,” says Lee Egerstrom, Minnesota 2020 fellow and report author.

Dollars typically go to the state’s smallest communities, most of which lack the tax base and population to afford infrastructure upgrades and development projects on their own.

Funds cover programs in seven categories: business assistance, energy upgrades, low-income housing, community facilities (nursing homes, medical units, community center, and so on), 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,” says Egerstrom.

He and Minnesota 2020 Communications Director Joe Sheeran visited Detroit Lakes Tuesday as part of a sweep through this part of the state.

Egerstrom’s 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.

“We have some legislators in the state who are going to be shocked about what communities will ask of them if this federal support is withdrawn,” Egerstrom said.