Under the Dome

November 26, 2013

State lawmakers want to protect tobacco payments from spending cuts

11 of NC's 13 members of the U.S. House have asked U.S. Agriculture Secretary to make sure that farmers will not see their payments from the Tobacco Transition Payment program reduced if there are more automatic federal spending cuts.

Eleven of North Carolina’s 13 members of the U.S. House of Representatives have signed a letter to Agriculture Secretary Tom Vilsak, asking him to make sure that the Tobacco Transition Payment Program will not be reduced as a result of more automatic federal spending cuts.

The Department of Agriculture announced earlier this month that tobacco payments and other farm payments could be reduced by 7.2 percent because of the cuts, known as sequestration. The cuts will go into effect under the 2011 Budget Control Act unless Congress takes action to reduce the deficit and create a budget. It’s also possible that Congress would adjust the percentage amount of the reduction.

The letter was dated Nov. 21 and released on Tuesday.

Republican Reps. Renee Ellmers and George Holding as well as Democratic Reps. David Price and G.K. Butterfield were among the 36 House members who signed the letter. Others on the letter from North Carolina: Democratic Rep. Mike McIntyre and Republican Reps. Richard Hudson, Howard Coble, Walter Jones, Mark Meadows, Robert Pittenger and Patrick McHenry. Only Democratic Rep. Mel Watt and Republican Rep. Virginia Foxx did not sign.

Sens. Kay Hagan and Richard Burr previously wrote separately to the USDA and the White House Office of Management and Budget calling for the 2014 payments to be made in full, the North Carolina Farm Bureau reported.

In its statement on Nov. 15, the USDA quoted Farm Service Agency Administrator Juan M. Garcia as saying: “At this time, FSA is required to implement the sequester reductions. Due to the expiration of the Farm Bill on September 30, FSA does not have the flexibility to cover these payment reductions in the same manner as in (fiscal year) FY13.”

Payments under the Tobacco Transition Payment Program are from about $10 billion assessed on tobacco product makers and importers. It was started under a 2004 law that ended Depression-era tobacco quotas. TTPP was set up to provide annual payments for 10 years, beginning in 2005, and so 2014 is the last year of payments.

“It is just so really perplexing to us that the government would consider this money in the sequestration process. Clearly this is private money and we just think (the automatic cut) should be considered a taking by the federal government,” said Larry Wooten, president of the North Carolina Farm Bureau.

Farmers and quota holders would get lower payments in January if the cuts are made, and lending institutions in North Carolina that securitized some of the payments would be out millions of dollars, he said.

“USDA has a responsibility to honor its commitment to our farmers, and the financial institutions that scrutinized TTPP payments,” the letter from the House members said, adding, “we respectfully request that USDA take the necessary steps to ensure that this user-fee funded program is not affected by 2014 sequestration cuts.”

In a statement Tuesday, Holding said: “When the Tobacco Transition Payment Program was created in 2004, North Carolina’s tobacco farmers were made a promise and the sequestration of tobacco buyout payments violates that promise.

“Not a single taxpayer dollar goes towards the tobacco buyout program – all of the money comes from a trust funded by the tobacco companies. This user-fee funded program should not be subject to the sequester cuts. Farmers have held up their end of the bargain, and the USDA needs to do the same.”

Related content



Editor's Choice Videos