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Agencies in Maryland dodge furloughs — for now

Unemployment and LayoffsBudget Control Act of 2011U.S. Department of DefensePublic HousingFood and Drug Administration
A month into federal spending cuts, there are signs the economic impact might not be as severe as feared.

A month after across-the-board federal spending cuts began, there are signs that one of the most troubling potential consequences for Maryland — the furloughing of federal employees — might not be as widespread as initially feared.

But the state has not gone unscathed by the $85 billion in cuts known as sequestration, and some of the first tangible changes in the Baltimore area are beginning to emerge as federal services are trimmed.

Fort McHenry in Baltimore and the Hampton National Historic Site near Towson plan to cut hours this summer, limiting visits by tourists. And the head of the city's housing agency said he is shutting the Section 8 housing program to several dozen new applicants a month.

Still, as service cuts begin, many of the largest federal agencies in Maryland — which are responsible for tens of thousands of jobs — said they hope to avoid furloughs for the rest of the fiscal year. Some economists now believe private-sector job growth may blunt the impact of federal payroll cuts in a state that is heavily reliant on government spending and is home to more than 300,000 federal workers.

"Most residents ... in this region aren't going to notice the hurt quite as much as they thought they were going to when they were thinking about it in January," said Stephen S. Fuller, director of the Center for Regional Analysis at George Mason University.

"We may duck the bullet this time around," he added. "But we're not done yet."

Many federal agencies based in Maryland, including the Social Security Administration and the National Institutes of Health, did not issue furlough notices to employees in March as some had expected. And the Department of Defense said last week that it intends to limit unpaid leave that could affect 45,000 civilian workers in the state.

Some of the largest agencies, including Social Security and the Food and Drug Administration, hopeful they can meet the spending reduction targets through the end of September without relying on furloughs at all.

Sequestration is the result of a failure by Congress and the White House to strike a deal to reduce the nation's more than $1 trillion annual budget deficits. In pressing for an agreement, President Barack Obama and other Democrats warned that the across-the-board reductions would slow the economy, jeopardize military readiness and cost hundreds of thousands of jobs. Republicans insisted that the projected impact was exaggerated and that cuts were needed to rein in federal spending.

The cuts that began March 1 are expected to fall hardest on Maryland and Virginia because of their geographic and economic ties to the nation's capital. Civilian and military federal workers in Maryland earn more than $25 billion in yearly wages, according to census estimates — representing about 10 percent of the state's economy.

To be sure, noticeable cuts to federal services have been made — or will be soon.

Fort McHenry, for example, is usually open 12 hours a day in the summer, and the website still shows hours of 8 a.m. to 8 p.m. for the peak tourism season. But Tina Orcutt, superintendent of the federal park site, said the grounds will likely be open from 9 a.m. to 6 p.m. this summer. She is trimming travel expenses for staff members, but expects the fort to continue scheduled programming and maintenance.

The Hampton National Historic site, which Orcutt supervises, also will trim summer hours. The grounds at Hampton — a sprawling estate dating to the early 1800s — will remain open seven days a week, but tours of the Georgian mansion and outbuildings will be offered Friday through Sunday instead of the usual daily. Orcutt said her staff will try to make exceptions for special events.

The Housing Authority of Baltimore City, meanwhile, has shut the Section 8 voucher program to new applicants — a move that will close off housing subsidies to about 50 additional Baltimore families a month and add to a lengthy waiting list.

The agency, which is expected to take a roughly $25 million hit in federal funding this year, is struggling to balance aid with emergency repairs it must make to its buildings, said Housing Commissioner Paul T. Graziano.

"There's a trade-off there," he said. "To do these basic, emergency capital improvements so that these buildings will continue to be occupiable, further money will come out of Section 8."

Furlough notices sent to workers at the Departments of Justice, Homeland Security and other agencies will impact Maryland. But for now, some of the largest agencies based in the state appear to have averted them.

Though it isn't making promises, Woodlawn-based Social Security, which employs nearly 12,000 people in Maryland, hopes it can continue to avert furloughs for the rest of the fiscal year, spokesman Mark Hinkle said.

The agency is cutting positions through attrition — at least 100 in March. It has also reduced overtime by about 64 percent.

The same holds true at the Food and Drug Administration, the Silver Spring-based agency that employs more than 11,000 people in Maryland. The FDA cut its travel budget and is considering reductions to existing contracts, a spokeswoman said, but has not issued furlough notices.

"The agency still does not currently anticipate the need to furlough any of our employees," the spokeswoman said.

For most federal employees, notice must be given 30 days before furloughs begin.

Critics of sequestration note that furloughs at federal agencies are still on the table for later this year, that schools in poor communities such as Baltimore will face significant reductions in the next academic year, and that low-income parents who rely on Head Start for early childhood education will soon be scrambling for other options.

In other words, Sen. Ben Cardin said, the full impact of sequestration has not yet been felt.

"It's going to have a negative impact on our economy from the point of view of jobs," the Maryland Democrat said. "This won't happen overnight ... but it's going to happen."

Budget cuts mandated by sequestration are spread over the fiscal year, so many agencies waited several weeks to see whether Congress would alter them. With changes now off the table for the rest of the year, officials are beginning to implement reductions.

But in the first month of sequestration, the fear that tens of thousands of Marylanders would be furloughed has not been realized. Agency officials say they have made cuts elsewhere or received added flexibility in a government funding bill that Congress approved this month.

An amendment to that bill, which Obama signed Tuesday, transferred $55 million within the Department of Agriculture to cover the agency's food inspection program, sparing food inspectors from furloughs. That move was considered particularly important for Maryland's poultry industry.

The Federal Aviation Administration, meanwhile, delayed for several weeks its plan to close five control towers at small airports in Maryland, including Martin State and Easton. Instead of closing April 7, the towers will shut down in late April or early May.

Furloughs for civilian defense employees, including at Fort Meade and the U.S. Naval Academy, have also been delayed. Defense Secretary Chuck Hagel said last week that the number of furlough days will be cut to 14 from the initial projection of 22.

Pentagon officials have not said how many employees might be exempted from furloughs.

The uncertainly has been difficult for defense employees such as Gerard Davis, 57, of Bowie, who works as a quality control inspector at Fort Meade. He and his wife are looking for second jobs so they're prepared if and when furloughs begin.

But Davis said it's hard to pursue a second job when it is unclear what days he might be furloughed.

"It's going to be tough," said Davis, who attended a rally on the base organized recently by the American Federation of Government Employees. The union represents about 3,000 of Fort Meade's civilian workers.

"The atmosphere here is everyone is waiting and hoping for the best but keeping it in the back of their mind," he said.

While furloughs are being delayed or limited, that does not mean there won't be other reductions that could harm the regional economy. Agencies that make no cuts to staff are likely to trim contract spending, said Anirban Basu, chairman and chief executive of the Sage Policy Group.

And that is a problem for Maryland's robust contracting community, which employs more than 171,000 state residents. The federal government awarded about $27 billion in contracts to Maryland businesses in the 2012 fiscal year.

"There will be an impact on the local economy," Basu said. "There has to be."

Maryland employers added 10,500 jobs in February — the most recent figures available. But that data does not include the effects of sequestration.

Timothy J. Adams owns Systems Application & Technologies Inc., a Largo-based logistics and engineering contractor that does work for the Defense Department and other federal agencies. He expects that the 24-year-old company will have to lay off employees — probably in other states — if it receives less work from the government.

"We're all still uncertain about where things are going," he said.

john.fritze@baltsun.com

twitter.com/jfritze

Copyright © 2014, The Baltimore Sun
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Unemployment and LayoffsBudget Control Act of 2011U.S. Department of DefensePublic HousingFood and Drug Administration
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