Operating loans to hard-pressed farmers would increase, but more than $1 billion would be cut from housing aid for low-income and elderly rural residents under President Reagan's fiscal 1984 budget.
Administration budget documents made available to The Washington Post indicate that total spending by the Farmers Home Administration (FmHA), an arm of the Department of Agriculture, would be cut by about $2.6 billion.
These cuts would be achieved in part by killing at least half-a-dozen FmHA rural programs, including business and industrial loans, a variety of water-development loans, low-income home repair and rental grants and fuel alcohol plant loans.
But the largest reductions would occur in the housing area, which accounts for $3.4 billion in FmHA activity this year. The proposed budget would slash the housing account to $1.2 billion--with $850 million of that to be sent to the states as block grants to operate their own programs.
Home ownership loans, which currently come to $2.3 billion, would fall to $280 million under the budget that Reagan is scheduled to send to Congress later this month. That would provide for about 3,000 housing units, compared with the 90,000 under this year's budget.
In other major cuts, rural rental housing aid would drop from $940 million to $16 million; rental assistance contracts, from $123.7 million to $62 million; low-income repair loans, from $24 million to $1 million; repair grants, from $12.5 million to zero; farm labor housing loans, from $19 million to $3 million.
The whopping cuts and the block-grant idea are certain to stir controversy on Capitol Hill, where a similar block-grant plan offered in 1982 by then-Sen. Harrison H. Schmitt (R-N.M.) drew strong bipartisan resistance and finally died.
Sens. Thad Cochran (R-Miss.), chairman of the Appropriations subcommittee that oversees FmHA, and Alan Cranston (D-Calif.) lined up more than 40 co-sponsors of an amendment to stop Schmitt. They contended the block grants, with their vastly reduced funding, would wreck long-established and successful rural housing programs.
An early reaction to the new proposals came from Robert A. Rapoza of the National Rural Housing Coalition, who called them "a double-whammy for rural America, where about 10 million people live in about 2 million substandard units."
"Not only do we have the huge budget cuts; we now will force people to deal with state governments, which don't have the same housing expertise as FmHA," Rapoza added. "Obviously, it's hard to kill a bad idea. The block-grant idea is bad; the budget cutting is bad. Yet this thing lives on."
According to the documents, the only FmHA increase in 1984 would occur in the farm operating loans, which would climb from this year's $1.5 billion to $1.860 billion. The FmHA has been under intense congressional pressure to provide more of these funds for farmers who cannot get year-to-year operating money from commercial lenders.