Generating Income with Fresh Promises, Rural Economic Success report from the Center for Rural Affairs

-- from the desk of Russ Gifford, Communications/Development Director, Center for Rural Affairs

Generating Income with Fresh Promises http://www.cfra.org/freshpromises.htm

The key to making a difference in rural areas is to generate local income. Home Grown Wisconsin (HGW) is a project started as the result of a University of Wisconsin research project.

HGW began when Wisconsin food buyers told researchers they wanted to buy from local producers, but they needed a process that was "simple, standardized and efficient." To fill this need, farmers banded together to start a cooperative wholesale business. In 1996, HGW was born. It generated about $12,000 in sales that first year. In 2004, those numbers had jumped to just shy of $400,000 according to the co-op's general manager, Suzanne Rubinstein.

How it works
HGW links growers and buyers to provide a single source for ordering and delivery services from the 25 member farms. "Most of our members are within an hour of Madison, [Wisconsin]," said Rubinstein, "and location is a really big part of our success." The members all follow organic practices, but not all are certified organic. Membership in the co-op is also "by invitation only."

Marketing
"The best marketing tool we have is being active in local farmers markets and participating in local events and initiatives," said Rubenstein, who notes the Dane County Farmers Market in Madison was the first step in getting the co-op off the ground. "We've been very fortunate. Our major clients are restaurant chefs who love the taste of the fresh foods. They are very loyal." Rubinstein added, when a chef changes to a new restaurant, "they take us with them."

The co-op expanded into the Chicago market in a similar way. They are represented every week in the major Chicago farmers market. Again, the chefs are a key factor in the success of the program. "We keep our relationships very personal. Chefs have visited our farms, to put a face on the food and the farm where their foods come from, so that is an advantage of being local," she added.

Of course, "local" is a relative term since Chicago is at least a two hour drive from the majority of the farms. Rubinstein also agrees it can be another two hours from the edge of Chicago to downtown, "if the traffic's against you."


As Jon Bailey and Kim Preston state in Fresh Promises, a more isolated area would need to use more indirect marketing strategies, "such as retail outlets, internet marketing, and catalog sales."

Regardless of location, Home Grown Wisconsin and Fresh Promises show there is an ability to bring additional dollars to rural areas by capturing some of the money that would normally leave the area. Those dollars are a crucial difference for rural counties and communities.

Lengthy Nebraska Legislative Tracking Update from the Center for Rural Affairs

-- from the desk of Jon Bailey, Director, Rural Research and Analysis Program

Legislative Update
January 24, 2005

The Nebraska Legislature is in full swing with the time for new bill introductions over and committee hearings proceeding and some bills being advanced to the floor.

The 2005 session is taking on the look of the “Tax Credit and Task Force” session. With state funds still tight, and with many mandatory spending items like Medicaid and education consuming a larger portion of the state budget, legislators appear to be turning more often to tax credits and task forces to accomplish policy goals.

The first major event of the session occurred last week with the release of the Governor’s budget recommendation. Our take on the Governor’s proposed budget and a first look at new bills is included in this issue of the Legislative Update. But first, a review of the transition in the highest levels of state government.

We apologize for the length of this Update – the first Bills Update is always the longest!

State Government Transition

Governor Johanns officially became Secretary of Agriculture (and former Governor Johanns) upon his confirmation by the U.S. Senate on January 20. Dave Heineman officially became Governor the afternoon of January 20.

On January 24, Governor Heineman appointed Rick Sheehy of Hastings as the state’s new Lieutenant Governor. Sheehy was serving his second term as mayor of Hastings. Sheehy is a paramedic and has worked for a Hastings-area ambulance service since 1982. Sheehy has served on the Hastings City Council since 1994 and as mayor since 2000.

Governor Heineman is scheduled to give his first State of the State speech to the Legislature on January 27.

Governor’s Budget Recommendation

On January 13, then-Governor Johanns and then- Lt. Gov. Heineman released the Governor’s budget recommendation for the budget biennium beginning July 1, 2005.

The Governor’s budget recommendation calls for a two-year average growth in spending of 5.8%. Four items – K-12 state aid to schools, Medicaid, higher education, and state employee salaries and benefits – account for nearly 83% of all recommended spending growth in the budget. In addition, the Governor’s budget proposal calls for full payment in the amount of $145.8 million of the settlement of the Low-Level Waste Lawsuit. Many legislators are calling for payment in installments.

In general, the Governor’s proposed budget does well by rural Nebraska. Education and entrepreneurship – major parts of rural communities – are the big winners of the Governor’s budget recommendations.

Education – Funding for K-12 education is the largest proposed spending increase in the Governor’s budget. The Governor’s budget proposes to fully fund Nebraska’s K-12 school aid formula, in stark contrast to cuts in public school funding that occurred at times over the past several years. The Governor’s budget proposes spending over $186 million more over the next two years for public school aid. Of course, how this funding is divided among school systems will be the real test of how rural schools fare in the ultimate state budget. However, it appears that rural schools and rural taxpayers may be among state budget winners.

Entrepreneurship – The Governor’s budget proposes a major small business and
entrepreneurial policy and budget initiative. Other states have enacted similar initiatives over the past few years, and the term “entrepreneurial” is often lifted to promote economic development policies that do not benefit small business development in rural communities. While the Nebraska entrepreneurial initiative has some of this, the proposals in the Governor’s budget specially target programs that have proven to work in rural communities.

The Governor’s budget and entrepreneurial initiative supports that by proposing to restore and double the funding for the Nebraska Microenterprise Partnership Fund and by funding the Enhancing, Developing and Growing Entrepreneurs (EDGE) program, an entrepreneurial training program administered by the University of Nebraska (the Center’s REAP program is a recipient of funds from the Nebraska Microenterprise Partnership Fund). The Governor’s budget also proposes to create and fund tax credit and grant programs that would provide incentives to invest in entrepreneurial activities in communities and neighborhoods that are experiencing high levels of out-migration or low per capita incomes. Many rural communities in the state could benefit from such programs.

Unfortunately, the Governor’s budget recommends terminating funding for the Main Street Program, another rural small business development program. This program has benefited many rural communities and should be continued.

We applaud the Governor’s proposal to restore and increase funding for small business development as an important first step in strengthening the rural economy. But it is only a first step. Until the state gets serious about investing in rural Nebraska the way it invests in metropolitan Nebraska it will never solve its long-term budget problems, because we will continue to have too few economic opportunities and too few people of income earning ages to support services for our children, our retirees and our community institutions.

Legislative Lingo Update

Throughout the course of these updates, we will be using certain terms that describe where a bill is in the legislative process. Here is a brief guide to those terms and some basic legislative procedure:

Each bill that is introduced is referred to a committee, and each bill receives a hearing before the committee of jurisdiction.

Committees have a number of options for each bill – send as introduced to the full Legislature for General File, send to General File with amendments, Indefinitely Postpone (or kill) the bill, or hold the bill over to the 2006 session .

Once a bill is sent to the full Legislature out of committee, it faces three possible stages – General File, Select File and Final Reading.

At the General File and Select File stages a bill can be amended; a bill cannot be amended at the Final Reading stage.

Priority Bills – Each Senator may designate a bill (not necessarily one he or she introduced) and each Committee may designate two bills “Priority Bills.” These bills received preferential scheduling treatment once the bill is advanced to the floor from committee.

Bills Update

As in the past, we will divide the bills we are working on or tracking into categories. Any bill designated a Priority Bill will also have a “P” attached to its number (for example, LB 123P). The chief sponsor of the bill is listed in parentheses.

The words Support or Oppose after a bill description indicate where the Center for Rural Affairs has taken a position on the bill. If neither word is indicated, the Center has not taken a position at this time.

Rural Development

LB 28 (Connealy) – The “Endow Nebraska Act.” The bill would provide a tax credit for a contribution to a qualified charitable organization. The primary purpose is to provide an incentive for contributions to local and community endowments and foundations, thus providing greater resources for rural economic and community development. A hearing was held before the Revenue Committee on January 21, and by a 5-3 vote the committee advanced the bill to General File (Senators Baker, Connealy, Cornett, Janssen and Preister voting to advance the bill, and Senators Landis, Raikes and Redfield voting to kill the bill). Support

LB 59 (Mines) – Would change the provision in the Microenterprise Development Act defining “microenterprise to allow for microenterprise loans up to $35,000 (from $25,000). On January 19 the bill was advanced to General File by an unanimous vote of the Banking, Commerce and Insurance Committee. Support

LB 273 (Cunningham) – Would create the “Building Entrepreneurial Communities” program through a $1 million grant program for each of the next two years. Communities and neighborhoods in “chronic economic distress” (high unemployment, low income or population loss) would be eligible for grants up to $75,000 for projects that seek to build entrepreneurial communities. Support

Agriculture/Livestock

LB 71 (Stuhr) – Would re-authorize the Agricultural Opportunities and Value-Added Partnership Act (formerly the LB 1348 grant program). This program was terminated through budget cuts in 2001 and 2002. This bill would re-authorize the program through 2009. The bill is schedule for hearing before the Agriculture Committee on January 25. Support

LB 132 (Cunningham) – This bill modifies the Nebraska Pasteurized Milk Law by providing exemptions to small-scale dairies and processors to the often-expensive bottling and processing requirements, and by allowing dairies and farmers to advertise on-farm sales of non-pasteurized milk (currently, the sale of non-pasteurized milk cannot be advertised). The bill is schedule for hearing before the Agriculture Committee on February 1.Support

LB 346 (Agriculture Committee) – Would modify several provisions of the Beginning Farmer Tax Credit Act all with the goal to make the tax credit more attractive and to increase usage. The proposed changes include: 1) an income tax credit to the beginning farmer as well as the owner; 2) making spouses, children, siblings of owners and trustees of agricultural assets eligible for the credit to expand the range of eligible assets; 3) providing beginning farmers a one-time income tax credit for the cost of the required financial management program; 4) increasing the tax credit mount from 5% to 10% of gross rental income for cash rents; 5) a tiered credit system that will provide a credit of 15% of the cash equivalent of share rent agreements; 6) definitions of shared rent agreements; and 7) increasing the net worth requirement to qualify as a beginning farmer from $100,000 to $200,000. Support

Education/Schools

LB 126 (Raikes) – Would mandate the “assimilation” of Class I schools (elementary-only schools) into K-12 school districts for the 2006-07 school year. The bill would eliminate Class I school districts, and would likely end many of the actual school buildings. There is prohibition of closing the school buildings through 2010 if the school building enrollment is at a certain level and if the school building is at least 10 miles from another elementary school or if the school building is the only school attendance center within the boundaries of an incorporated city or village. We view this as forced consolidation of rural schools and as potentially the first step in major forced consolidation of rural schools. The bill was advanced to General File on January 21 by the Education Committee with only Sen. McDonald voting not to advance. Oppose

LB 129 (Education Committee) – An overhaul of the formula for state aid to schools. In subsequent issues of the Legislative Update we will provide an analysis of this bill. The bill is schedule for hearing before the Education Committee on January 25.

Taxes

LB 133 (Connealy) – Would provide a renewable energy sales tax credit, and would provide any generator of electricity from a renewable resource a credit against any sales and use tax.

LB 309 (Connealy) – Would establish the Small Business Rural Microenterprise Tax Credit. The bill would provide for $2 million worth of tax credits annually for small business (with five or fewer employees or beginning farmers/ranchers) in areas with declining population or low incomes or federal enterprise zones. A taxpayer may receive up to a $10,000 credit per year. Support

LB 404 (Wehrbein) – Would create a tax credit for livestock modernization and expansion. The goal of the bill is to “attract and retain investment in Nebraska’s livestock industry.” The bill would provide a refundable credit equal to 10% of the $500,000 of investment and 5% of investment from $500,000 to $1 million. A taxpayer may receive a maximum aggregate of $75,000 in credits. Modernization and expansion investment is defined as the construction, improvement or acquisition of buildings, facilities or equipment for livestock housing, confinement, feeding, production and waste management. A hearing before the Agriculture Committee was held on January 21.

Business Tax Incentives

There are numerous bills relating to amending Nebraska’s business tax incentive laws, including LB 646 (Brashear) that would create the Advantage Nebraska Act, a new LB 775. In a subsequent issue of the Legislative Update we will analyze these bills.

Other

LB 189 (Preister) – Would mandate an electricity portfolio from renewable sources of 1% in 2007 and increasing 1% every year until it reaches 10% in 2017. This would apply to all electricity produced in the state. The bill also creates a mechanism for the buying and selling of credits to meet the portfolio standard.

LB 208 (Stuthman) – Provides for the appropriation of $1.75 million annually for the next two years to the state’s five federally qualified health clinics to provide services to the uninsured (the clinics are in Omaha, Lincoln and Scottsbluff). Support

LB 550 (Jensen) – Requires a plan to be submitted by December 1, 2005, for the financial support of community health centers and emergency medical services in the state.

LB 655 (Beutler) – Would create the Task Force on Small Employers Health Plans that would review data and policy ideas concerning health care plans for small employers and recommend policy steps for the state on this issue.

Center for Rural Affairs, 145 Main Street, Lyons, NE 68038. www.cfra.org

REAP Small Business Development Courses Offered at Southeast Community College in Beatrice, Nebraska starting January 31, 2005

PRESS RELEASE
NEWS from the Center for Rural Affairs
FOR IMMEDIATE RELEASE

Contact: Glennis McClure, Center for Rural Affairs
Phone: (402) 645-3296
Email: reapwbc@diodecom.net

January 20, 2005

REAP Small Business Development Courses Offered at SCC - Beatrice

The Center for Rural Affairs’ Rural Enterprise Assistance Project (REAP) and Southeast Community College are teaming up to offer several short-courses focused small business development. On Monday, January 31st, Glennis McClure, REAP Women’s Business Center Director will lead a two hour Small Business Ownership seminar at SCC-Beatrice. This seminar is designed to help anyone understand how to proceed in making your business dream a reality. This is a pre-workshop to REAP’s Business Plan Basics Course that is set to start, March 30th on the Beatrice campus.

In addition, McClure will present a two-night seminar for anyone interested in learning more about marketing concepts for their small business’s products or services. Marketing for Small Business is set to begin on Monday evening, February 21st at SCC – Beatrice.

Then, March 7 - 28, REAP is co-hosting a Basic eCommerce for Small Business Owners at SCC – Beatrice. This four part course is about small businesses making and saving money online. It’s an exploration course about using online resources for e-Commerce and e-Retailing. REAP’s e-Commerce courses are also co-hosted by the University of Nebraska Cooperative Extension in cooperation with the Nebraska Rural Initiative.

Business technical assistance services and a micro-loan program for small businesses are available through REAP. To register for any of the SCC courses, contact Kelly Morgan 402-228-8244 or kmorgan@southeast.edu.

For more information about REAP services or Women’s Business Center services call Glennis McClure (402) 645-3296 or reapwbc@diodecom.net.

--//--

Established in 1973, the Center for Rural Affairs is a private, non-profit organization working to strengthen small businesses, family farms and ranches, and rural communities through action oriented programs addressing social, economic, and environmental issues.

This U.S. Small Business Administration (SBA) Cooperative Agreement with the Center for Rural Affairs is partially funded by the SBA. SBA’s funding is not an endorsement of any products, opinions, or services. All SBA funded programs are extended to the public on a nondiscriminatory basis.

Nebraska 2005 Legislature bills of interest to the Center for Rural Affairs

-- from the desk of Jon Bailey, Director - Rural Research and Analysis Program, The Center for Rural Affairs

The Center policy research staff has reviewed all the bills introduced in the Nebraska 2005 Legislature (all 763 bills and 28 constitutional amendment resolutions), and in keeping with the legislative agenda approved by the CFRA Board at the last meeting, collaborations and grant obligations, we have developed the following list of bills that should merit the most attention and work (testimony, etc.):

LB 28 – the “Endow Nebraska Act,” to provide an income tax credit for certain charitable contributions.

LB 59 – changing provisions in the Microenterprise Development Act (namely, changing the definition of “microenterprise” to allow loans up to $35,000).

LB 71 – re-enact the LB 1348 value-added grant program.

LB 129 – an overhaul of the formula for state aid to schools.

LB 132 – the milk bill.

LB 133 – provide for a renewable energy credit.

LB 189 – establishing a renewable energy portfolio standard.

LB 208 – funding of federally qualified health centers to provide services for uninsured persons.

LB 273 – the Entrepreneurial Communities Act.

LB 309 – the Small Business Rural Microenterprise Tax Credit.

LB 334 – changing the Community Development Assistance Act to add entrepreneurial activities.

LB 346 – changes in the Beginning Farmer Tax Credit.

LB 404 – tax credit for livestock modernization and expansion.

LB 425 – the main budget bill – the microenterprise funding is the chief interest.

LB 550 – requiring a plan to fund community health centers.

LB 655 – creating a task force on small employers health plans.

There are, of course, many other bills we will be watch with interest – many other economic development bills, many bills to change the tax incentive programs (including a brand new version of LB 775), many bills to change the tax structure, and many other education bills (Kim Preston will be monitoring these). As Priority Bills are designated and bills begin to move to the floor our focus will likely change and some bills will be more closely watched (and worked on) and others will drop off the list.

There are two bills we are still analyzing that may be of interest – both deal with the authority of NIFA (the Nebraska Investment Finance Authority) to fund community economic development and agricultural projects.

Check back for weekly legislative activity updates.

Center for Rural Affairs Annual Gathering February 26, 2005 in Norfolk, NE

-- from the desk of Russ Gifford, Communications/Development Director, Center for Rural Affairs

Best Selling Author Thomas Frank Keynote Speaker

In 1973 a group of feisty northeast Nebraskans established an organization that would take on the underlying issues challenging family farms, ranches, and rural communities. We're still going strong 32 years later.

At our annual gathering we share ideas, listen to others, and meet friends old and new. The Center for Rural Affairs staff, board, and people interested in the future of rural America – people like you - will gather this year in Norfolk, Nebraska, at the Life Long Learning Center at Northeast Community College. The program starts Saturday, February 26 at 10:00 a.m. (Registration starts at 9:30 a.m.)

We are excited to announce that our key note speaker is Thomas Frank, best selling author of What’s the Matter with Kansas and a frequent guest on national news programs. A stinging critic of both political parties, he’ll make you mad, he’ll make you laugh and, most important, he’ll make you think. I believe we can all agree on his central thesis – the political process today is not working for ordinary rural people. His speech will launch a discussion on how we rural people can fix that.

As always, we have put together a strong program of the issues in our rural communities that most need attention. This meeting promises to be informational and thought-provoking. Can we count on you to join us there?

Following registration, which is from 9:30 to 10:00 a.m., attend your choice of teach-in style discussions. There will be multiple choices so you can pick the sessions that interest you.

The topics include small business strategies, high value livestock markets and cooperatives, federal farm and rural policy including critical budget legislation, wind power, and a popular new model of community development. These are just a few of the many important topics.

(I'll post the schedule once all the speakers have been finalized.)

The main course for the noon meal is roast beef, marinated pork loin, green salad, and roasted potatoes – all family farm produced and locally sourced. The tickets for dinner will be sold at the registration table. Look for our food suppliers in our small business fair area, which will be open throughout the meeting.

We'll have frank discussions about the future of small businesses, family farming and ranching, and rural communities as seen through your eyes and ours. The point is how we’ll face the challenges of today and tomorrow in rural America. Bring your friends!

We look forward to seeing you in Norfolk on February 26th!

Nebraska Sen. Connealy introduces a tax credit for small business, farms and ranches.

-- from the desk of Chuck Hassebrook, Executive Director, Center for Rural Affairs

Nebraska state Senator Matt Connealy has introduced The Small Business Micro Enterprise Tax Credit Act (LB 309) to provide tax credits for starting small businesses and family farms and ranches in economically depressed rural and urban areas.

Unlike most job creation tax incentives, it is aimed at owner operated small businesses employing five or fewer people and at beginning farmers and ranchers. It would support self-employment as well as job creation. It would provide a 20% tax credit for investment in qualifying businesses. The credit would be refundable – meaning that businesses would receive a check from the state if it has insufficient income to make use of a tax break.

As this legislation was introduced, the legislature was being lobbied for even more big business tax breaks. But state policy is already out of balance.

Nebraska invests disproportionately in big business and high growth areas and under invests in small business and struggling communities. Any new tax breaks for big business should be offset by measures to correct the excesses of the current law and balanced by passage of LB 309.

It's time to start investing in the economic engine for the rest of Nebraska – small enterprise.

For additional comments or questions please contact the Center for Rural Affairs, www.cfra.org, 145 Main St., PO Box 136, Lyons, NE 68038. (402) 687-2100.

CFRA Logo 

On our way

Greetings and Welcome to the Center for Rural Affairs' web log.

Check here for first response to the changing legislative and economical environment of Rural America. You can check our website, www.cfra.org, for reports, issue briefs, press releases and our monthly newsletter.

But here is where you'll want to be in order to get the low down on what makes the Center tick. We'll introduce you to the people behind the scenes, the ones who do the research and the leg work, so you can stay on top of the issues. We'll keep you in touch with their thoughts and opinions regarding what is happening and what can happen to keep small farms and ranches, micro businesses and rural communities viable for the future.

Let's start with the Center's response to the Nebraska Governor's proposed budget:


Proposed Budget is an Important First Step for Rural Nebraska
Center for Rural Affairs sees positives, but budget "still falls short on important rural needs."

LYONS, NE -- "Until the state gets serious about investing in rural Nebraska the way it invests in metropolitan Nebraska, we will never solve our budget problems," says Chuck Hassebrook, executive director for the Center for Rural Affairs.

The increase for small business development funding - adding back $250,000 in small business development funds cut in previous budgets - is a good first step for getting Nebraska back on the plus column in revenue, according to the Center for Rural Affairs. But the decision to delete funding for the Lied Main Street program makes it seem that funding rural Nebraska is a game no one ever wins.

"These economies are tied together, and both need attention. This should not be a situation where Lincoln or Omaha wins, rural Nebraska loses. But too often it seems that any money going to rural Nebraska has to come from other rural programs," said Hassebrook.

Noting that Nebraska's population of wage earners (18 to 65 year olds) is 45th in the nation, Hassebrook points out that Nebraska "will continue to have too few people of income earning ages to support services for our children and retirees" if rural Nebraskans don't receive similar earning opportunities.

You can reach the Center at 402-687-2100. Chuck Hassebrook's email is chuckh@cfra.org.