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March 15, 2013
Volume 13
Issue 15
Thanks to Allen, Bartholomew, Decatur, Ripley, Rush, Tippecanoe, Vigo and Wayne County Farm Bureaus for visiting the Statehouse this week.
The following Statehouse visits are scheduled for next week:
Tuesday, March 19 – Clay County.
Wednesday, March 20 – Jefferson, Pulaski and Sullivan counties.
Thursday, March 21 – Boone, St. Joseph and Switzerland counties. The Vincennes University Ag Students will also be visiting the Statehouse.          

This week the General Assembly returned to normal activity after a lull following the mid-session break. Committee chairs again began scheduling and hearing bills and the number of citizens visiting the Statehouse picked up as well. Among those visiting the Statehouse were several county Farm Bureau groups, all of whom were welcomed by their home county legislative contingent.

VIDEOTAPING BILL SENT TO COMMITTEE   This week Speaker of the House Brian Bosma (R-Indianapolis) assigned SB 373 to the House Agriculture & Rural Affairs Committee. This is the bill that will make it illegal to photograph, videotape or otherwise record agricultural or industrial operations without the consent of the property's owner for the purpose of harming the owner. The bill contains an exception for those who record an activity they suspect is illegal and share the recording with an appropriate law enforcement authority within 48 hours. Before assigning the bill, Speaker Bosma had been receiving intense pressure from animal rights organizations to kill the bill by not assigning it. Farm Bureau thanks the speaker for allowing this bill to proceed through the legislative process. Ag Committee Chairman Don Lehe (R-Brookston) has indicated that there are plans to hold a hearing on the bill Thursday, March 21.

HOUSE COMMITTEE APPROVES STUDY OF INDIANA'S HORSE RACING INDUSTRY   The House Public Policy Committee has unanimously approved SB 609 (Sen. Luke Kenley, R-Noblesville & Rep. Bob Cherry, R-Greenfield), a bill that will, among other things, direct the Indiana Horse Racing Commission to contract for an independent study to examine the impact of the horse racing industry on Indiana's economy. The study will be conducted over a two year period and will be funded by a contribution of $50,000 by each of the state's two race tracks from funds that would otherwise be used for purses. Farm Bureau's Bob Kraft testified in support of SB 609 stating that the equine industry, including its horse racing component, is an integral part of Indiana's agricultural community. He said that Farm Bureau believes that the study to be authorized by the bill would clearly establish the importance of the horse racing industry to both the state's agricultural and overall economy.

MOTOR VEHICLE HELD IN COMMITTEE   SB 538 (Sen. Tom Wyss, R-Fort Wayne & Rep. Ed Soliday, R-Valparaiso), a comprehensive bill that addresses a number of motor vehicle license and operating issues, was held in the House Roads & Transportation Committee this week. Committee Chair Soliday wanted to make sure that the language in the bill dealing with agriculture met with the approval of the committee’s members. As introduced, the bill would have made it illegal for any person under 16½ years of age to operate farm equipment. As a result of Farm Bureau’s efforts, the bill was amended in the Senate and will allow anyone to operate tractors or implements of agriculture that are designed to be used in off-road farming activities on public roads when the use of the public road is incidental to normal farming activities. Some of the House committee members felt this language needed clarification and that is being worked on.

HOUSE PANEL OKs MEASURES TO FACILITATE NATURAL GAS IN RURAL AREAS   Farm Bureau's Bob Kraft testified in support of SB 560, which was presented by its Senate author Sen. Brandt Hershman (R-Buck Creek). Among the bill's provisions is one which would allow county councils to designate "infrastructure development zones" that would provide property tax exemptions for delivery infrastructure constructed within the zone. As it passed the Senate, SB 560 provided this exemption only for natural gas lines. The bill was amended at the suggestion of Utility Committee Chairman Eric Koch (R-Bedford) to include broadband and water infrastructure as well. 

In his testimony, Kraft pointed out that agriculture is an energy intensive undertaking and that farmers would welcome natural gas if it were available. He also noted that the availability of natural gas is, at times, a pivotal point in site location decisions by economic development prospects. Since off-farm employment is important to many of Farm Bureau’s member families, Kraft said that Farm Bureau supports measures that will encourage prospective employers to select rural communities for their expansion plans.

BILL TO CHANGE LOCAL GOVERNMENT REORGANIZATION PROCESS AWAITS ACTION   A bill that would bring the procedures for the consolidation of a municipality with the unincorporated portions of a county or with a township into line with Farm Bureau policy is awaiting action in the House. SB 343 (Sen. Randy Head, R-Logansport & Rep. Bob Cherry, R-Greenfield) passed the Senate by a vote of 46-3 on February 7, but has not yet been scheduled for a hearing by House Government & Regulatory Reform Chairman Kevin Mahan (R-Hartford City). Under the procedures established in SB 343, voters in both the municipality and the unincorporated area must separately approve any proposed merger. This bill, if enacted, will give rural residents a greater voice in determining whether they want to be incorporated into a city. If you are interested in this bill, please contact your state representative and ask him or her to encourage Rep. Mahan to give SB 343 a committee hearing.

SINGLE COUNTY EXECUTIVE BILL   Another bill assigned to the House Government & Regulatory Reform Committee is SB 475 (Sen. Travis Holdman, R-Markle & Rep. Martin Carbaugh, R-Fort Wayne). This bill would allow county commissioners in Allen County to propose to the voters that the three-member commission be replaced with a single county commissioner. Farm Bureau policy supports retaining the board of county commissioners as it is presently structured. Both Indiana Farm Bureau and Allen County Farm Bureau opposed this bill in the Senate. Although the bill has not yet been posted for a committee hearing, Farm Bureau staff understands that committee chairman Kevin Mahan (R-Hartford City) does intend to give it a hearing. If you are concerned that this bill could lead to a precedent that will be adopted in other counties, you should share that concern with your state representative.

FARMERS TRAVEL TO WASHINGTON, D.C.   Nearly 50 farmers from across Indiana were in Washington, D.C., this week to visit with the Indiana congressional delegation about priority issues for Hoosier farmers. These Farm Bureau members visited the American Farm Bureau Federation offices and had joint educational presentations with Missouri Farm Bureau. They carried messages to the Hill on the importance of the farm bill and crop insurance as a risk management tool, the need for a workable policy for current and future agricultural labor, the impact of some tax reform provisions on Hoosier farmers and the challenge with EPA guidance documents removing the word navigable, which was not intended by Congress. 

IMPORTANCE OF CROP INSURANCE STRESSED ON HILL   Farm Bureau and 42 other associations sent a letter to Capitol Hill this week about crop insurance. The significant widespread crop losses of 2011 and 2012 have clearly demonstrated the need for crop insurance protection and the public-private partnership of program delivery. Federal crop insurance provides an effective risk management tool to farmers when they are facing losses beyond their control, reduces taxpayer risk exposure, makes hedging possible to help mitigate market volatility and provides lenders with greater certainty that loans made to producers will be repaid. It is a product selected in advance and tailored to the individual producer, with that producer choosing his or her product and protection level, and paying a premium for that coverage. In contrast, ad hoc disaster assistance is an after-the-fact form of assistance paid for entirely by the taxpayer that may help a producer survive a disaster but does not help manage risk. By their very nature, these ad hoc programs are uncertain at the start of the year, subject to some significant bureaucratic hurdles and support can arrive years after the fact. Importantly, because of the protection crop insurance provides, there were no calls for ad hoc disaster assistance in 2012 as there have been in the past.

SENATE BEGINS DEBATE ON CONTINUING RESOLUTION   The Senate began debating the continuing resolution, H.R. 933. This bill would prevent a government shutdown and continue government operations until the end of the fiscal year, September 30, 2013. The Senate proposal includes full-year appropriation bills for the following departments: Agriculture; Commerce, Justice & Science; Defense; Homeland Security; and Military Construction and Veteran Affairs. The House-passed CR only includes full-year appropriation bills for the Department of Defense and Department of Veterans Affairs. Final passage of the bill is expected on Friday or Saturday. 

Farm Bureau took the following positions on the CR:

  • Oppose a provision in the bill that requires USDA to rescind existing Packers and Stockyards Act regulations that protect poultry farmers.
  • Support a provision that clarifies the secretary of agriculture’s authority to partially deregulate a biotechnology trait by introducing temporary stewardship requirements that allow farmers to continue to grow and harvest a crop that has previously been deemed safe and deregulated but is being challenged in court.
  • Support an amendment which prevents EPA from enforcing the Spill Prevention, Containment, and Control (SPCC) rule against farmers through the end of the fiscal year.
  • Oppose an amendment that strikes funds supported by Department of Defense to help procure alternative fuels that help strengthen national security while insulating the department from price shocks on the global oil market. Farm Bureau secured funding for the DOD biofuel initiative last Congress.

WAYS & MEANS COMMITTEE PROPOSES TAX REFORM PLAN FOR SMALL BUSINESSES   The House Ways & Means Committee has started the process of writing a fundamental tax reform bill by creating working groups to review current law and collect stakeholder input on 11 topics including small business. Chairman Dave Camp (R-Michigan) released a discussion draft of provisions to reform the taxation of small business and pass through entities. The discussion draft includes several provisions of interest to farming and ranching. Farm Bureau is analyzing the financial impact of the following proposals.

Cash Accounting

  • Most farmers use cash accounting because they find it easier to keep records and because it can be used as an income averaging tool and as a way to reduce taxes by coordinating income and expenses.
  • Under cash accounting, revenue received is attributed to gross income in the year it is received. Generally, expenses are deducted in the tax year that they are paid. Generally, farming businesses are not currently covered by the requirement that taxpayers with over $5 million of average annual gross receipts must use accrual accounting. However, a family farm corporation is required to use accrual accounting if it has gross receipts of more than $25 million for any tax year since 1985. A family corporation is one where 50 percent or more of the corporation stock is held by one (or in some limited cases two or three) families. In addition, a partnership that has a corporation as a partner can’t use cash accounting.
  • The Ways & Means Committee discussion draft for reforming the taxation of small businesses proposes eliminating the special exceptions for farming businesses so that they are subject to the general limitation on the use of cash method accounting. Those limitations would be that business entities (i.e. C-corps, S-corps and partnerships) with average gross receipts of $10 million or more for the three prior taxable years must use accrual accounting. Individual/sole proprietors would be able to continue to use cash accounting without limitation.

Section 179 Small Business Expensing

  • Section 179 allows farmers and ranchers to manage their tax liabilities by better matching income and expenses. Under Section 179, farmers and other qualifying small businesses can immediately deduct the full cost of purchased business property, single purpose agriculture structures, petroleum storage facilities and off-the-shelf computer software that are used in their farming business. For 2013 the maximum amount a taxpayer can expense under Section 179 is $500,000, reduced dollar for dollar by the amount that expenses exceed $2 million. These thresholds are temporary and will shrink to a $25,000 limitation with a $200,000 threshold for 2014.
  • The Ways & Means Committee discussion draft for reforming the taxation of small businesses proposes a permanent $250,000 expensing limit that would be reduced dollar for dollar when expenses exceed $800,000. The amounts are indexed for inflation.



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