www.baltimoresun.com/explore/howard/news/ph-ho-cf-sequestration-0228-20130225,0,2924843.story

baltimoresun.com

Sequestration puts Howard business community 'on edge'

By Blair Ames, bames@tribune.com

8:05 PM EST, February 25, 2013

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With less than a week to go until the federal government's March 1 deadline to reach an agreement avoiding a set of spending cuts known as sequestration, Howard County's business community is in the dark about its potential impact.

Pam Klahr, president of the Howard County Chamber of Commerce, said area businesses and their employees are "on pins and needles" waiting to see what effect sequestration will have on them.

"Everyone is on edge," she said. "There is just no reason this has to happen."

Sequestration is a set of automatic, across-the-board spending cuts set to take effect March 1 unless Congress can reach an agreement to avoid the cuts intended to reduce federal spending.

With more than 50,000 county residents either a federal employee or government contractor, Klahr said this could be a "direct hit" on Howard County.

Duane Carey, chairman of the Chamber of Commerce, said sequestration eliminates predictability for area businesses and contractors.

While government employees face furloughs or the prospect of losing their jobs, Carey said a ripple effect will be felt by local restaurants and small businesses.

"It's definitely a shock to the local economy," he said.

He added the threat to government employees highlights the importance of private sector jobs.

""It's times like this that we're reminded that we need a broad, diverse economy," he said.

Alan Kersey, vice president for Engineering Services of LG-TEK, an Elkridge technology and security contractor, said he has received "no guidance" from the government on how sequestration could affect the company's contracts.

But they have been directed to keep costs and labor rates down in new contracts, he said.

Kersey said he's "not worried at all" about how sequestration could impact LG-TEK, speculating that Congress will "kick the can down the road" before coming to an agreement.

"They can't afford not to fix it," he said. "The day-to-day manning of operation centers, they can't go away."

Mike Muscatello, a partner with Aronson Accounting Services in Rockville, said the most frustrating aspect for his clients is the lack of information.

"The frustration is just not knowing what's going to happen," he said.

Muscatello speculated the cuts will be agency dependent, with the National Security Agency and cyber-security centers seeing less of an effect.

Ron Sroka, chief operating officer of Evolve Consulting, a health-care consulting company based in Crofton, said the looming sequestration will be "very disruptive" to his clients, which include 10 Howard County companies.

"It just doesn't allow a business to focus on growing, bidding and completing contracts," he said.

While the impacts of sequestration are unknown, the Howard County Chamber of Commerce last week launched GovConnects, a new initiative aimed at helping area businesses take advantage of government contracting opportunities.

Maureen Thomas, GovConnects executive director, said sequestration could have a "tremendous impact" on the county and business leaders she has spoken to are "nervous and worried."

If lawmakers can't avoid sequestration, Thomas believes GovConnects will increase in value as it works to connect area businesses with government contracts.

"Every advantage a company can get is going to help," she said.