Governor Freudenthal vetoes Aggie Bond program in last stage of approval
Cheyenne – New legislation to financially assist beginning agricultural producers in Wyoming would have created opportunities for banks to lend money to new farmers and ranchers tax-free through tax-exempt bonds.
SF34, a bill creating the Beginning Agricultural Producer Finance Authority, authorized the program, which has commonly been known as “Aggie Bonds.” Wyoming Business Council Agribusiness Director Cindy Garretson-Weibel first brought the project to the Wyoming Legislature 10 years ago.
“We tried for three consecutive years, and last spring the Joint Ag Committee asked what they could do to help producers, and they wanted to bring it back,” she says.
She says the creation of an entity to manage the tax-free loan program, the Finance Authority, was a requirement by the federal government for banks to qualify for tax-exempt loans.
“The criteria for eligibility in the program is specific, and set up by IRS guidelines,” says Garretson-Weibel.
Although the Wyoming House and Senate passed the Aggie Bond program in the 2009 session, original Senate File 34 and Senate Enrolled Act 62 were vetoed by Governor Freudenthal March 13, although he called them an “admirable goal.” He expressed concern with the clarity of the bill’s language.
According to a press release, in his letter to the Secretary of State, the Governor said it appears the intent of the Legislature was to create a quasi-public corporation to provide financial assistance to “beginning agricultural producers” on more favorable economic terms than they could obtain in the ordinary commercial market.
One of the bill’s regulations stated the individual cannot have owned more than 30 percent of the median acreage in the county in which they live. “This program is truly designed for the first-time owner/operators,” says Garretson-Weibel of the loans, which could have been used to purchase land or depreciable property such as equipment and breeding livestock.
“The first step would have been to become involved is working with a local lender,” says Garretson-Weibel.
Following an agreement between a producer and the lender, the Finance Authority would have approved applications, then worked with the local lender. “It would have been a joint process between the producer, the ag lender and our program,” she explains. “The loans will already have been through the screening process of the bank when the Finance Authority sees them. They’ll look at eligibility – if the applicant is truly a beginning producer.”
She says the Aggie Bond program would have been a little different than the state investment program because the state isn’t the lending institution – the banks are and the state only provides bonding authority.
She says the Board would have wanted applicants to have an ag background and be capable of running an agricultural operation. Although the loans were intended for ag lands, facilities and equipment, she says there are exceptions, like a certain amount of the loan can be used for a house on a piece of farm ground.
The Board would have consisted of a Business Council member as Chairman, a member of the Wyoming Department of Agriculture, a livestock producer, a crop producer and one at-large member.
Because each state is under a bond cap allocation, Wyoming has a $280 million limit on how much money it can use tax-free. Garretson-Weibel says she expected the Aggie Bond program to use $5 to $10 million each year.
The maximum loan amount is now $450,000, after the 2008 farm bill increased the maximum from $250,000. That also includes an annual adjustment for inflation.
“This is an admirable goal,” the Governor wrote to the Secretary of State. “However, based on consultation with the Attorney General and private bond counsel, I believe this bill is significantly flawed and fails to achieve its admirable goal. In addition, the bill’s language is less than a model of clarity.”
There are 18 programs nationwide for beginning ag producer loans that convene annually, and Garretson-Weibel says Wyoming has already been a part of that through its planning process.
The Governor has encouraged promoters of the proposal to work with the Attorney General’s Office if they choose to again advance the proposal. Garretson-Weibel says she’ll bring the issue back before the Joint Ag Committee in their spring meeting to determine if there is interest in bringing the bill back to the 2010 Wyoming Legislature.
Christy Hemken is assistant editor of the Wyoming Livestock Roundup and can be reached at email@example.com.