In anticipation of U.S. Senate action on the 2007 Farm Bill, Senator Max Baucus of Montana announced that he is assembling a proposal that would shift funding from incentive payments to tax credits, reports the Wildlife Management Institute. The shift would involve payments for some disaster relief, energy and conservation programs, including the Wetlands and Grasslands reserve programs. Baucus sits on the Senate Agriculture, Nutrition and Forestry Committee and chairs the Senate Finance Committee.

Proponents have opined that the proposal could add up to $10 billion in additional funding for the Farm Bill and free up the money previously used for incentive payments to underwrite other programs in the bill.

Others on Capitol Hill aren't quite as enthusiastic about this approach. Senator Tom Harkin of Iowa, chair of the Senate Agriculture, Nutrition and Forestry Committee, is among those expressing reservation. Harkin has pointed out that, since it would be necessary to earmark funding to cover the revenue lost as a result of tax credits, the proposal actually would do little to assist with the bill's bottom line. In addition, he expressed concern about language that would constrain the ability of his (Harkin's) committee to shift funding between programs in the legislation.

With the current 2002 Farm Bill's September 30 expiration looming, no date has been set for consideration of the tax-incentive package in the finance committee. Harkin noted his desire that the Agriculture, Nutrition and Forestry Committee take action on the new Farm Bill prior to the end of September. With each passing day, prospects for a new Farm Bill approved in time to preclude an extension of the current legislation get more remote. This wouldn't be unprecedented; both the 2002 and 1996 bills required continuing resolutions before they were finally approved.

The House passed its version of the 2007 Farm Bill in July. That measure called for more than $6 billion in expenditures above the $20 billion originally budgeted for the legislation. The additional funding was addressed in the House by means of additional taxes or closing existing tax loopholes benefiting multinational companies with U.S. subsidiaries. There doesn't appear to be enough support for this approach to be adopted in the Senate. Assuming the Senate version differs substantially from the legislation already approved by the House, it will be up to a conference committee to work out the differences and develop language that can be adopted by both the House and Senate.