Report Shows FY 2007 Budget Cuts Key Rural Small Business Initiatives

Report Shows FY 2007 Budget Cuts Key Rural Small Business Initiatives

Significant resources slashed for rural business development and economic growth programs

WASHINGTON - As House Republicans continue the struggle to secure the votes needed to pass President Bush's FY 2007 budget request, Democratic Members of the House Small Business Committee released a report today assessing the impact of the budget on rural small businesses. The report found that 25 major initiatives administered by 8 federal agencies designed to provide assistance to small rural firms would be affected by passage of the President's proposal, severely threatening the ability of these entrepreneurs to stimulate local communities and strengthen rural industries.

"Small businesses are the lifeblood of our nation's rural and agricultural communities - they work hard to earn a living, provide job opportunities, and contribute to the growth of their local economies," said Congresswoman Nydia M. Velázquez, Ranking Democrat on the House Small Business Committee. "But rural America continues to face many economic challenges, and these hardworking entrepreneurs should not be expected to bear the brunt of balancing the budget."

The report found that the President's budget request cuts over $1 billion in funding and nearly $9 billion in loan authority for a host of federal programs specifically designed to support the economies of America's rural communities. Out of 75 small business programs government-wide targeted to be cut or eliminated, one-third of these are concentrated on programs that have traditionally benefited entrepreneurs in rural regions, including those that provide capital access, entrepreneurial assistance, economic development, technological advancement, and rural initiatives. In particular, agricultural spending is less than one-half of one percent of all federal spending - yet 25 percent of all mandatory spending cuts in the FY 2007 budget proposal come from agriculture assistance initiatives. Small firms are the main source of entrepreneurial and employment growth in rural and agriculture-based communities across the country - and this budget fails to support these vital functions.

Adding to the concern is that many small rural firms, which operate 90 percent of the establishments and employ two-thirds of the population in rural regions, face unique challenges in ensuring their businesses are able to adapt to dynamic economic conditions. These businesses are often key to the economic stability of local communities. The majority of local industries are dominated by small firms, including independent farmers - which account for 70 percent of all agricultural producers nationwide - as well as agribusinesses, restaurants, and local grocery and retail stores, among others. These enterprises are not only an integral component of rural areas, but produce a large portion of the country's food supply, energy resources, and unique products and services - significant contributors to the growth of local and national economies. Velázquez said, "Rural communities rely on a strong entrepreneurial framework, but this proposed budget only creates barriers to their success - and represents the wrong set of priorities for rural small business owners."

"This budget clearly undermines the competitiveness of rural small businesses, and limits the ability of hardworking American entrepreneurs in these regions to do what they do best - create jobs and stimulate the economy," Congresswoman Velázquez said. "The continued advancement of our rural communities will not be accomplished unless the Bush administration - along with Congressional Republicans - recognizes the urgent need to continue investing in this vital sector of the economy."

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