Harford County anticipates impacts from sequester

Harford County, home to Aberdeen Proving Ground and the massive federal military and civilian workforce that comes with it, is bracing for automatic federal spending cuts – known as sequestration – which could have a ripple effect far beyond Aberdeen.

"It will have an impact countywide, because the people that work at Aberdeen Proving Ground live throughout Harford County," Jim Richardson, director of the county's Office of Economic Development, said.

The Army post has been in Harford County for nearly a century, providing facilities for the testing of weapons and military vehicles and equipment. It employs about 22,000 military and civilian staff through APG's various entities on the Aberdeen area, and Richardson said about 61 percent of those in that workforce live in Harford County.

The sequestration, a series of automatic federal spending cuts set to take effect Friday, if Congress cannot agree on an alternative spending package for 2013, includes a provision to furlough civilian employees for 22 days spread throughout the year.

"We're going to see it mainly by the reduction in pay for the federal employees [through furloughs]," Richardson said of the impact on Harford County. "It's going to affect retail, restaurants, shopping, grocery stores; we're going to see some impacts, there's no question."

President Barack Obama and Congress agreed to put a series of tax increases and spending cuts – known as sequestration – in effect in the wake of debt ceiling fights between the president and Congress in 2011 and 2012.

The spending cuts, which many experts feared would throttle the nation's fledgling economic recovery, were designed to force national leaders to come to a compromise on federal spending.

The so-called fiscal cliff, the date when the federal government was expected to default on its financial obligations without a debt ceiling increase, expected to take effect Jan. 1, but lawmakers were able to approve a deal that day. The deal included across the board spending cuts that automatically go into effect March 1, if Congress doesn't act.

The sequester is designed to cut $1.2 trillion in federal spending over 10 years, with $85 billion cut in 2013. The impact would be felt in cuts to military jobs, training, purchasing, research and development, as well as services at national parks and other recreation facilities, cuts in health care, education, law enforcement, Homeland Security and other federal services.

"This is not an abstraction," Obama said in a recent speech archived on CNN.com. "People will lose their jobs."

As home to Aberdeen Proving Ground, Harford County is preparing for what could be a large hit to the local economy.

"Currently, leadership is planning, based on guidance provided by [the Department of Defense], for up to 22 days [of furloughs]," Kelly Luster, public affairs chief for the garrison at APG, wrote in an e-mail Tuesday. "All services or facilities which employ civilian personnel will be affected to some degree, to include reduced services, longer wait times, and fewer personnel available to provide necessary services."

Luster went on to say "civilians fix our ships and tanks and planes, staff our hospitals, handle contracting and financial management, and much more. Furloughs, like other spending cuts, will adversely affect economies in the communities where our civilians live and work."

With nearly two thirds of APG's workforce living in Harford County, local officials expect to see an impact on income tax revenue as workers lose 22 days of income.

Richardson said income tax is "a major component of Harford County revenue," along with real estate taxes.

County Treasurer Kathryn Hewitt said income tax revenue – which the state distributes to counties after collecting withholdings from workers' paychecks – makes up nearly 36 percent of revenue for the county's general fund, and 28 percent of revenue for the entire budget.

The general fund supports education, law enforcement, parks and recreation and other "general government services," Hewitt explained.

The state allocates income tax to counties, based on previous years' tax filings by each county's residents. Hewitt said the sequestration would not have an impact on county coffers rights away, but it could show up some months from now, "based on the way the state distributes the tax to us."

"The sequestration, if it happens now – in March – will not have an immediate effect, but it will have an effect, yes," she said.

Harford County Public Schools officials have not yet received "any information from the Maryland State Department of Education (MSDE) regarding any potential state or federal cuts in funding," Teri Kranefeld, manager of communications for HCPS, wrote in an e-mail Monday. "It is too early to speculate on what, if any, impact this will have on Harford County Public Schools at this time."

In Aberdeen, the impact of sequestration will not just be felt on post.

"The impact of a 22-day furlough would be 20 percent less payroll coming into Aberdeen," Dean Ertwine said.

Ertwine is a retired Army brigadier general whose last assignment was to the Developmental Test Command at APG.

The Bel Air area resident is vice president of the Army Group at Battelle, a worldwide nonprofit research and development company headquartered in Columbus, Ohio. The firm provides a variety of support services to the U.S. military, Department of Homeland Security and Department of Energy.

It is one of a number of companies with a presence in Aberdeen to support the mission at APG.

Battelle operates the BEST Center (Battelle Eastern Science & Technology) in Aberdeen. The BEST Center provides laboratories and other services to support programs at APG and the post's other local facilities to develop defenses against and responses to chemical, biological, radiological and nuclear attacks.

Ertwine said about 200 people are employed at the BEST Center, and 60 to 80 percent of them live in Harford County.

"We've been impacted, just like other companies," he said.

Ertwine said a number of measures have been put in place at the BEST Center "to control or reduce overhead so that we've been able to avoid releasing staff in any significant numbers."

He said conference attendance has been reduced, the firm has been very "selective" about organizations that it sponsors or maintains memberships in, and has cut advertising to "practically nothing."

Members of Congress are working to find a solution to avoid sequestration.

"We must stop sequester with a balanced approach to reducing our debt and deficit that includes reforms to the tax code, strategic cuts to mandatory spending and gives credit for cuts already taken," U.S. Sen. Barbara Mikulski, a long-serving Maryland Democrat, said Sunday. "We can do it if we work in a bi-partisan way across the aisle and across the Capitol dome to agree on closing tax loopholes and making strategic cuts while maintaining our investments in education and innovation. That's how we'll create jobs today and jobs tomorrow, accelerate our economy and reduce our debt and deficit."

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