On Tuesday, Governor Brown released a revised state budget that attempts to invest the unexpected revenue in one time actions while preaching a tone of austerity and control.   In a release, the Governor's office stated the budget, "strengthens California's fiscal integrity by investing in California's schools, chipping away billions from the "Wall of Debt" and maintaining a prudent reserve.  But California's fiscal stability will be short-lived unless we continue to exercise the discipline that got us out of the mess we inherited."

The revised budget plan unveiled is balanced and on track to lower the state's debt to $4.7 billion by 2017-a reduction of over 86 percent. This was achieved through billions of dollars in permanent cuts in the 2011-12 and 2012-13 budgets as well as temporary revenues passed by voters last year.  At the center of the May Revision is a significant investment in the state's public schools. The plan provides $1,046 more per K-12 student in 2013-14 than was provided in 2011-12 and funding levels will increase by $2,754 per student through 2016-17.

In addition to the higher ongoing funding, the May Revision proposes to invest $1 billion in one-time revenues to support implementation of new national standards for evaluating student achievement in English-language, arts and math (known as Common Core Standards).

The May Revision also proposes:

• A state-based approach to the optional expansion of subsidized medical care allowed under federal law. This expansion will significantly increase health care coverage and access to new federal dollars.
• A revenue-neutral revamping of the state's enterprise zone and hiring credit programs to encourage manufacturing investment and increase employment in high-poverty areas.
• An additional $48 million in CalWORKs job training and subsidized employment opportunities.
• To maintain a $500 million increase to the University of California and California State University systems with additional increases in each of the next four years to make higher education more affordable, more efficient and to maintain quality.

While the budget is projected to remain in balance for the foreseeable future, the May Revision also recognizes the risks posed to the budget - including the uncertain economic recovery, court rulings and actions from the federal government - which underscore the need to maintain fiscal discipline.  Further information on the May Revision can be found at www.ebudget.ca.gov.

Democratic Assemblywoman Norma Torres defeated Republican Paul Leon for the SD 32 special election seat. Torres defeated Leon by a margin of 59.4% to 40.6%. The 32nd Senate District includes the eastern portion of Los Angeles County including cities of Pomona and the western portion of San Bernardino including the cities of Ontario and Chino. 

As the saying goes, the House writes a Farm Bill; the Senate writes a Farm Bill, and then they rewrite the Farm Bill in conference.  That process is well underway as both Senate and House Agriculture Committees this week approved 2013 five-year comprehensive farm legislation, with both bills closely resembling legislation written in 2012, and both bills representing significant budget savings.  Both bills carry about a $100 billion-per-year price tag, but nearly 80% of that is the cost of nutrition programs including federal food stamps.  Overall, most national agriculture organizations praised the committees for moving bills forward, and while each group was not 100% happy with both bills, relief at the progress and apparent speed with which the bills are moving generated optimism. These groups know the heavy lifting will be done in conference committee.

Senate Farm Bill:  The Senate vote was 15-5, with four senior Republicans and a lone Democrat voting against the bill.  Senate Majority Leader Harry Reid (D, NV) says the bill will be on the floor for full chamber action early next week.  The Senate's ag program package - estimated to save $24.4 billion - was the trickier to get through committee as GOP leadership changed this session with the ascension of Sen. Thad Cochran (R, MS) to the ranking member slot.  This forced Chair Debbie Stabenow (D, MI) to rewrite the commodity title of the bill, which kills off $5 billion in direct and countercyclical payments, to reflect Cochran's desire to provide greater payment protection to southern crop producers to balance out last year's shallow loss income protection program which his producers alleged favored large, Midwest farmers. That program option pays producers the 12-22% of the difference between losses covered by crop insurance and total calculated loss, and caps payments at $50,000 per farmer. New to this year's Senate bill is the Adverse Market Payments (AMP) program option, essentially keeping 2008 target price levels in place for most crops. Sens. John Thune (R, SD) and Pat Roberts (R, KS) opposed the new program, with Thune unsuccessfully trying to amend the language to kill off the target prices for all crops but peanuts and rice. Both Thune and Roberts argued the target price notion was a step backward as the committee moved to eliminate direct payments altogether.  

The marketing loan program for wheat, rice and other crops was retained.  Roberts, who voted against the final committee product, said, "I do not believe this is a reform bill. I believe it is a rearview mirror bill." Sen. John Boozeman (R, AR) declared the House wouldn't accept the new target price program. Dairy support programs are replaced by a margin protection program, similar to the House approach.  Program payments are capped at $750,000 per farm, and other payments.  Federal crop insurance is expanded in the bill by about $5 billion by creating new supplemental coverage option allowing producers to buy more coverage above that normally purchased for crop losses.  Cotton producers get their own insurance program.  An agreement between environmental groups and farmers to resolve the issue of forcing farmers to enter conservation programs in order to qualify for crop insurance was reflected in the bill, but Sen. John Hoeven (R, ND) unsuccessfully tried to kill the provision.  Twenty-three conservation programs are consolidated into 13, and caps the Conservation Reserve Program at 25 million acres. The bill provides nearly $800 million for a number of existing and new alternative energy programs at USDA, preserving programs designed to find alternative feedstocks to corn in producing ethanol.  Federal food stamps are cut by $4.1 billion. The full Senate bill can be found at www.agriculture.senate.gov.

House Farm Bill:  The House Agriculture Committee approved its bill on a 36-10 vote, with Chair Frank Lucas (R, OK) reporting the bill will save nearly $40 billion over 10 years, including $6 billion in sequestration cuts.  "This is an adventure that began two years ago and we have an adventure ahead of us in June," Lucas said, referring to expected House floor action. While votes to support action were narrower than last year, most were strong enough to demonstrate bipartisan support for the package. The House bill kills off most direct payments, establishes full planting flexibility, and creates a producer choice between a Price Loss Coverage (PLC) program and a Revenue Loss Program (RLP).  PLC is analogous to the Senate shallow loss program in that it provides a "complement" to existing crop insurance coverage. RLC requires a farmer to have at least a 15% loss, is based upon county-wide coverage based on broad losses, and uses yields and indexing of below-cost of production prices as its benchmark. Both apply up to the total base acres of each farm.  Dairy supports are replaced by a voluntary "basic-level" margin coverage program, similar to the Senate, but this program is controversial among some producers as it requires supply control through the Dairy Market Stabilization Program.   

On crop insurance, the House creates a Supplemental Coverage Option (SCO), an "area-wide group risk policy," designed to cover losses not paid by individual crop policies.  Like the Senate, the House rolls 23 conservation programs into 13, saving about $6 billion. The CRP cap is lowered to 24 million acres.  Energy program renewals save about $500 million, but all biomass and biofuels programs - including research and commercialization assistance for non-food crop feedstocks - are reauthorized.  Accepted during markup was an amendment by Rep. Steve King (R, IA), same as one accepted last year, to make it illegal for states to ban the sale of foods from other states where livestock/poultry production practices are different.  The amendment is aimed at California where it's illegal to sell eggs from hens not raised under standards identical to those in California; King says his state is the nation's largest egg producer and the California law - as well as laws in Oregon, Washington and Maine - are illegal and interfere with interstate commerce.  Where the Senate cuts about $4 billion from federal food stamp assistance, the House bill cuts a whopping $20 billion over 10 years, even more than the $16 billion approved in the 2012 bill.  Full details of the House bill can be found at www.agriculture.house.gov.

The marathon Senate Judiciary Committee markup of comprehensive immigration reform continued this week, with the committee dodging a bullet on guest worker visas as its Chair Patrick Leahy (D, VT) expressed frustration over the number of outstanding amendments and lack of formal votes taken so far.  At the same time, members are awaiting the Congressional Budget Office (CBO) "score" on how much the Senate package will cost now and after all amendments have been accepted and a final committee package is in hand.  The House "gang of six" bipartisan members said this week the Senate's bill "an amnesty bill" and unfair to immigrants here legally. They called for securing the borders before any discussion of immigration reform.  House Judiciary Committee Chair Bob Goodlatte (R, VA), has said his committee will not address a comprehensive bill, but rather smaller, more focused bills that can be rolled into a package on the House floor.   

Plaguing both the Senate effort and that in the House are issues of how many visas in each category should be allowed for guest workers; how to treat health insurance coverage for undocumented workers - should workers buy their own insurance if not covered by a company plan or be covered under the new health care law - and payment of back taxes by those granted new immigrant status. In the House, immigration reform negotiators are quickly nearing a make-or-break deadline in developing legislation, and critics of the House GOP approach see this as an opportunity for pressure to be brought on House Speaker John Boehner (R, OH) to simply bring a Senate-passed bill to the House floor, with divisions to be bridged in conference committee. There's House conservative frustration with deals worked out between the AFL-CIO and the U.S. Chamber of Commerce that would green light about 200,000 unskilled workers to enter the country each year.  This provision is a keystone to the Senate package. On the health insurance front, this may be an issue for the respective chamber's tax writing committees, along with provisions requiring the payment of back taxes to qualify for new legal status.   

On the Senate side, the Judiciary Committee opted this week to postpone action on rewriting the law on H-1B visas - those for high-skill workers - to see if Sen. Charles Schumer (D, NY) and Sen. Orrin Hatch (R, UT), ranking member of the panel, can work out a deal Hatch wants to allow more science, technology, engineering and math (STEM) workers into the U.S. each year. The bill currently caps the number of STEM visas at 65,000; Hatch wants that raised to 110,000. The issue is whether there's a U.S. citizen who could do the job, and how to get companies to demonstrate "good faith" efforts to recruit a citizen before bringing in an alien.  Hatch plays a pivotal role in the evolution of the bill as he also sits as a senior member of the Senate Finance Committee. He's carrying amendments developed by Finance that would require the IRS to set up a benchmark for undocumented immigrants to hit to show payment of owed taxes.

USDA announced a number of personnel appointments this week.  Patrice Kuresh was appointed deputy undersecretary for rural development. She previously served as an attorney on Indian affairs at the Interior Department.  Anne Alonzo has been named administrator of the Agricultural Marketing Service (AMS), and previously was vice president for global public policy at Kraft Foods.  Judy Canales has named the Texas state executive director for the Farm Service Agency. Canales previously served as administrator of the Rural Business-Cooperative Service (RBS).   

USDA Urges Farmers to Enroll in DCP/ACRE

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