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Legislative News and Views - Rep. Bob Vogel (R)

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House passes bill for farm loans

Monday, February 13, 2017

Dear Neighbor,

A bill the House passed last week replenishes funding for a loan program that is popular among farmers.

In this case, the state is a loan facilitator, not the originator. That seemingly minor detail of the bill is, in fact, a major distinction. It is a key reason the bill (H.F. 14) warrants strong support.

First, some background: The bill appropriates $35 million in bond proceeds to the Rural Finance Authority for loans to eligible farmers. The usual procedure is for RFA funding to be provided by the Legislature through capital investment bills but, with no bonding bill approved in 2016, the pot ran dry and a loan applications are unable to be processed.

Here is why, with the government as a facilitator, this program is successful: The government-run RFA partners with agricultural lenders to provide low-cost financing to farmers. The government does not take on the full risk of lending, rather facilitates loans to help farmers gain access to terms and conditions maybe not otherwise available from other credit sources.

A good comparison is Federal Housing Administration loans that are available to homeowners, where the government partners with lenders in the form of private mortgage insurance. People are able to purchase homes through this program because the federal government facilitates them and captures PMI payments made by consumers.

In the RFA case, a portion of the loan is carried at a reduced interest rate to improve the cash flow of eligible farmers. The RFA offers programs within the beginning farmer loan and seller assisted program, agricultural improvement program, debt restructuring program, and livestock expansion programs.

You could argue that, without excessive government regulations, farmers would have access to loans without having to rely on programs such as RFA. That is true, but that is whole different subject of reform to take up another day. For now, the bottom line is these bonds are 100-percent user-financed, meaning the state will be paid back and, because of RFA facilitation, farmers are able to access funds to improve their operations.

The bill now is now in the Senate’s hands. Visit this link or call (651) 201-6556 for more information on RFA loans.

On a personal note, I am again working on a bill that would provide greater transparency and accountability in regard to fees we pay on our utility bills. “Franchise fees” are used by municipalities as a tool of direct taxation and very often citizens are unaware they even exist, much less that they are paying them.

Click here for a news release I issued last session with more information on this subject and, until next time, have a good weekend and enjoy the relatively mild weather.

Sincerely,

Bob