By Gwendolyn Glenn
4:52 PM EST, March 8, 2013
When Congress and the White House failed to make a deal on budget cuts March 1, sequestration went into effect, requiring federal agencies to identify $85 billion in required cuts.
The looming reductions, which will be spread across agencies — with the exception of safety-net programs such as Medicaid — has federal employees and those who benefit from federal dollars concerned about how and if they will be affected.
Laurie Proietti, the acting director of Laurel Advocacy and Referral Services, said she's concerned about how the sequestration cuts will affect her agency and the residents it assists.
"I'm sure our funding for next year will be affected, so we are worried," Proietti said. "We received $66,000 from the Fannie Mae Help the Homeless Program (Fannie Mae backs a large percentage of the country's mortgages) and that may be affected. We're also worried about the grants we receive from the (Department of) Housing and Urban Development, that we use for transitional and permanent housing assistance."
If the White House and Congress fail to make a deal in coming days and weeks, Maryland would be particularly vulnerable because of the state's military installations and the large number of residents employed by the federal government full time or as contractors and suppliers.
"With Fort Meade, Andrews (Air Force Base), NASA, NIH (National Institutes of Health) and our universities, which are also dependent on federal contracts, the sequester would be very bad for the local defense and non-defense economies," said District 21 Sen. Jim Rosapepe. "This is a job killer and depresses the economy when it needs stimulation."
In Maryland, government officials predict 46,000 civilians who work for the Department of Defense could be furloughed under sequestration. In addition, according to the Prince George's County executive's office, federal jobs make up 10 percent of the county's work force. Officials estimate the sequestration cuts in federal dollars to the county would amount to $150 million this year at a time when the county is hurting for funds.
In the past few weeks, there have been dire predictions from both sides of the political aisle about pending layoffs, furloughs, closures and a halt of numerous government services, including diminished air travel. Yet furloughs require a 30-day notice to employees of most federal agencies, and there is the hope that a budget deal will be reached before the bulk of the cuts take effect.
Laurel City Council President Frederick Smalls is hoping for that best-case scenario.
"I don't think we'll see any immediate or long-term impact from this or that Congress will let it (sequestration) have a real negative impact," Smalls said. "In the environment we live in with 24-hour news, things sometimes get sensationalized. I think before this gets too serious, something will occur and be worked out."
Smalls, who is also the deputy secretary of state for Administration, Finance and Human Resources, added that he has not heard any alarm bells going off or talk of cutting jobs in Annapolis because of the failed budget deal.
"That's not to say it isn't being watched closely, but I have not heard any talk of furloughs," he said. "I deal directly with the (state) government's finance office in my role, and if that was looming or possible reductions were planned, I'd know about it."
In terms of Laurel, Smalls is also optimistic that the failed budget negotiations and the pending sequestration will not have a major effect on the city.
"I haven't heard the mayor express any concern," he said. "One thing we can be confident in as a city is that we have adequate reserves and we handle our money appropriately. If there is any concern, it would be at the state level and that can trickle down."
Businesses bracing locally
However, not everyone in Laurel is as optimistic as Smalls.
Although Laurel Board of Trade Chairman Matthew Coates believes a deal on budget cuts will be reached soon, he says many local businesses could be hurt in the meantime. He said that could include local cleaning companies, office suppliers, printers and others that do work for the federal government, including his Main Street photography shop.
"I have a federal government contract and they said they couldn't pay my invoice at this time because no funds were available," Coates said. "I will be paid but at a later date. Any business with a contract is still liable for the work, so I had to produce the work and the money came out of my funds. That will happen across the board and some business owners might not be able to afford to do that. If this (sequestration) is long term, businesses will go under."
Laurel resident Carmen Gonzalez-Reid is an account executive for Office Images, a Rockville-based company that provides an array of furnishing and design services to its clients. She said although about 50 percent of the company's business comes from the federal government, because of their commercial contracts, she's not worried about the company going under or her job being eliminated. But she said things have slowed down considerably on the government side.
"The federal piece of our business is significant in terms of acquiring new business, and government officials are holding back on projects," Gonzalez-Reid said. "There are projects on board that have been approved, but there is no activity because officials are not comfortable spending money because they don't know if the money will be there."
Gonzalez-Reid said that's especially the case with their military clients.
"One of the things we do is select and install furniture for Department of Defense offices and in this current atmosphere, they are holding back and not looking at furniture as a real priority," she said.
If the sequestration lasts for several months, affected residents will certainly scratch many things they do now off their priority lists. Laurel Board of Trade member Robert Mignon said local businesses will feel the effect of those decisions.
Mignon, who owns Minuteman Press, predicted Thursday that the budget negotiations would collapse. He agreed with Smalls that the city government is sound when it comes to sequestration's effects, but not local businesses.
"There is a lot of fear in the business community because people aren't spending money on things due to fear," Mignon said. "We had the fiscal cliff in January and now sequestration. The deficit talks are coming up and Congress doesn't seem to be addressing it."
As for his business, if no agreement is reached soon and layoffs, furloughs and closures kick in, Mignon said he will definitely see a loss in revenue.
"I would be affected because clients, like churches, that do programs or organizations that do newsletters won't do them as often because their members may be out of a job," he said.
Schools face uncertainty
In terms of education, in a worst-case-scenario Maryland could lose more than $14 million in federal funds this year for primary and secondary schools, according to White House numbers. At risk would be the jobs of 200 teachers and classroom aides in the state and Maryland's Head Start could be eliminated for 800 students.
At Laurel High School, Principal Dwayne Jones said he knows there's a possibility his school could be affected by sequestration.
"I'm like everybody else and have no idea," Jones said. "I do know if this isn't worked out, and federal funds are cut, it will trickle down to the school. We do get federal money, and it may be slowed down."
Budget experts say schools nationwide would probably not see any funding changes for months. Jones agreed and said it's next year's budget, which he is currently working on, that has him concerned. He's already thinking of possible areas to cut if Congress and the White House do not reach a compromise on the budget.
"We'd probably end up having larger classes or eliminate certain programs in case that happens (and no compromise is reached)," Jones said. "I don't think either side wants that, but it's a mixed bag of information that we're getting, with different spins about whose fault it is. To me, no one's innocent and I'm tired of the partisan politics."
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