The farm economic crisis, in combination with reduced federal and state aid, has put many of the nation's rural communities under their most severe stress since the Great Depression, according to a Senate study released yesterday.
The study, which focused on farming areas of six midwestern states plus Montana and Arkansas, reported that declining farm income and plummeting land values have put rural areas in a financial bind that inevitably will lead to higher taxes and reduced services.
"In the absence of such actions," the report said, "local government revenues will fall short of existing expenditure levels by $106 per capita in the eight multicounty regions examined . . . . Higher taxes and reductions in services have the potential to permanently change the quality of life in rural America."
The study also said that prospects of a turnaround in the fortunes of rural areas were made dimmer by cutbacks in federal and state aid that traditionally have buttressed development and service programs in agricultural areas.
If left unchecked, the farm crisis "has the potential to seriously -- and in some cases permanently -- undermine the fiscal foundations of many rural communities," the study concluded.
Sen. David F. Durenberger (R-Minn.), chairman of the intergovernmental relations subcommittee that prepared the report, called its findings "awesome . . . a real sleeper in the larger crisis facing rural America."
Durenberger, promoting a targeted fiscal assistance bill he introduced in the Senate, said, "Governments at all levels must move now to prevent an irreversible decline in the ability of rural areas to cope with the dramatic economic changes they are now facing."
The subcommittee study, echoing a number of reports on the impact of the farm crisis on rural life, made these major points:
*Net farm income in the areas studied, down 40 percent from the average of the booming 1970s, has sharply affected rural businesses and eliminated jobs. For a nine-county area of Minnesota, the report found that there were 15 percent fewer commercial-sector jobs than there would have been with the higher farm income levels of the past decade.
*The income decline has contributed to a 30 percent drop in farm land value across the nation during the last four years. The $146 billion land-value fall between 1982 and 1985 was equivalent to the assets of 11 major U.S. corporations that included such giants as International Business Machines Corp., General Electric Co., Kodak and McDonald's.
*These declines have led to an erosion of local tax bases and sent property tax delinquencies soaring. Tax delinquencies climbed sevenfold in the Nebraska areas studied, while they more than doubled in the Iowa, Kansas, Minnesota and Montana communities surveyed.
*Tax revenues in six of eight states studied grew more slowly than the national average in the last two fiscal years, and revenues declined in four states during one of those two years. Six states made midyear reductions in fiscal 1986 budgets because of the pinch.
*Federal aid reductions are compounding the impact of the farm crisis on local governments. While federal aid to local governments rose slightly between 1982 and 1984, it declined by 18 percent during the same period in the agriculturally dependent areas studied. The proposed elimination of revenue sharing "will hit rural local governments twice as hard as the average locality," the report said.
The study said "serious long-term erosion in public services can still be avoided if prompt actions are taken at all levels of government."
It urged more local efforts to broaden tax bases and target federal general aid to local governments, and retention of tax code provisions that promote economic development and self-help.