Barack Obama

Illinois roads win, farms lose in Bush budget

Wednesday, February 8, 2006

Associated Press

President Bush's proposed budget is a mixed bag for Illinois, offering big boosts for transportation needs and research for alternative fuels coupled with cuts in farm subsidies and a transaction fee for the futures and options markets. Bush's new spending plan unveiled Monday for the year starting Oct. 1 calls for a 5% cut in crop subsidy payments to farmers.

For some of the state's major businesses, such as the Chicago Board of Trade, the Chicago Mercantile Exchange and the Chicago Board Options Exchange, he would impose transaction fees to support the agency that regulates the futures and options markets. A similar proposal in 2002 received much opposition.

In line with the multiyear transportation bill Bush signed last year, Illinois would be a leading beneficiary of increased spending on highway work, with $1.2 billion, about $300 million more than in the last budget year ended Sept. 30, 2005.

House Speaker Dennis Hastert, R-Ill., issued a brief statement not commenting on specific proposals in Bush's $2.77 trillion blueprint, but emphasizing the president had only laid the groundwork for reining in federal spending.

"Make no mistake: this House of Representatives will keep a sharp eye on controlling spending throughout the budget process," the Yorkville lawmaker said.

Meantime, Illinois' Democratic senators -- Dick Durbin and Barack Obama -- lashed out in lengthy statements at Bush's budget, criticizing the president for everything from shortchanging funding for police officers to health care benefits for military retirees to grants to help communities fight methamphetamine use.

This year, more than 40 Illinois communities are splitting $12.9 million for Byrne Memorial Grants, for the methamphetamine problem, that help communities fight violent crime and assist crime victims, Obama said. Next year, they would receive nothing under the president's proposal.

Durbin complained the budget for the Low Income Home Energy Assistance Program would be cut to $1.78 billion from $2.16 billion nationwide, with Illinois suffering an $11 million reduction from the nearly $113 million it received last year. "Americans are struggling to pay home heating costs, yet the president's budget cuts funding to help the most vulnerable in our nation pay their bills," said Durbin, the Senate's second-highest ranking Democrat.

Chuck Spencer, a spokesman for the Illinois Farm Bureau, said his group obviously would be concerned about any proposed reduction in crop subsidy payments to farmers, but would need to study Bush's overall proposal before commenting further.

The cut in payments would affect all commodity programs, including marketing loans, direct and countercyclical payments and the Milk Income Loss Compensation program. Bush's proposal also would reduce from $360,000 the limit cap for individual farmers to $250,000 for all commodity payments, an idea the farm bureau has consistently opposed in past years. The administration envisions that the 5% reduction in subsidy payments, combined with the new limit on how much a farmer can get, would save $6.1 billion over 10 years.

"It appears that Illinois farmers pay a heavy price in the president's budget this year," Durbin said. "His proposed budget cuts to price support programs will cost Illinois farmers about $65 million."

The government paid Illinois farmers almost $2 billion -- an average of $54,365 a year -- in the year that ended Sept. 30, according to the Illinois Farm Service Agency. The state's farmers would have lost about $100 million, if the Bush proposal were in effect then.

Bush also would have a new transaction fee on futures and options markets go to support the Commodity Futures Trading Commission, which currently is supported by general taxes and has a proposed budget of $127 million.

"We oppose a tax," said Allan Schoenberg, a spokesman for the Chicago Mercantile Exchange, who said he would have no more comment for now.

Bush had a similar proposal in 2002 that prompted all 21 members of the Illinois delegation to sign a letter to the administration in opposition.

"The two largest U.S. futures exchanges, the Chicago Board of Trade and the Chicago Mercantile Exchange, are responsible for tens of thousands of jobs in the Chicago area and put over $10 billion nightly in Chicago banks," they said.

On a plus side for Illinois agriculture, Bush proposes a 70% increase to $298 million for research into alternative fuels such as ethanol and biodiesel as well as solar power.

Also, the Army Corps of Engineers has about $206 million in proposed projects for Illinois, including $110 million for the Olmsted Locks and Dam, along the Ohio River, where Kentucky and Illinois share their border. Most of the money is for improving navigation along the Ohio, Mississippi and Illinois rivers, where much of the barge traffic caters to the Midwest's farm economy.