- The Washington Times - Tuesday, February 26, 2013

Local leaders in the D.C. region are bemoaning the drastic cuts they could be forced to make if Congress fails to reach a deal by Friday to avoid sequestration, but some analysts and officials say the effects won’t be as immediate or disastrous as some people think.

The White House says Virginia, Maryland and the District stand to lose millions in funding for education and health programs if Congress doesn’t reach an agreement to avoid $85 billion in federal cuts to be applied over the next seven months. But analysts say that few of the cuts will take effect immediately and that most can be prevented if lawmakers craft a deal in the coming weeks.

While cuts in the D.C. region could force local governments to lay off hundreds of teachers and reduce public services, it appears the biggest impact won’t come from lost federal funding but rather from the potential loss of federal and contractor jobs, which could begin with government furloughs in coming days but wouldn’t take their most serious toll for another few weeks or months.

“The amount of money that’s going to be cut on March 1 should be relatively small,” said Mark Vitner, a senior economist at Wells Fargo Securities. “It would seem that some of the proposed cutbacks are just attempts to whip up support for coming up with a temporary solution that kicks spending cuts further down the road.”

Democrats and Republicans have sounded the alarm over the potentially dire effects of sequestration, and many prominent elected officials — including Maryland Gov. Martin O’Malley and Virginia Gov. Bob McDonnell — have taken to the airwaves in recent days to urge Congress and the president to work out a compromise.

In an interview Tuesday with WTOP Radio (FM-103.5), Mr. McDonnell, a Republican, said he expects Congress to miss Friday’s deadline and warned that resulting cuts would disproportionately affect Virginia, which like Maryland relies heavily on federal jobs, military presence and contractors.

Sequestration “was meant to be a hammer on both sides to get further reductions in a rational way; it wasn’t meant to be a policy,” he said, lamenting that half of the cuts are aimed at defense. “It’s random, it’s not thoughtful and it doesn’t respect the men and women in uniform.”

The cuts detailed by the Obama administration outline funding reductions that would take place over the remainder of the federal fiscal year, which ends Sept. 30, but they only hypothesize potential job and service losses that such reductions could lead to and do not account for possible funding increases that states could take on to cushion the blow.

The list shows that Maryland and Virginia would each lose $14 million for primary and secondary education — equivalent to 200 teacher and aide jobs and elimination of certain services to as many as 14,000 students — even though lawmakers in each state likely would pass supplemental legislation to use their own funds to at least partially fill the gap.

Other anticipated funding losses for student work-study programs, child care and vaccination and environmental programs are among those that could also be at least partially recouped with state funds.

“It’ll be up to us to decide what we can replace with local money,” said Warren G. Deschenaux, director of the Maryland Department of Legislative Service’s Office of Policy Analysis. “The major impacts on Maryland aren’t going to be the loss of federal funds in the state budget.”

Mr. Deschenaux and other analysts say the biggest concern for states in the D.C. region is that the potential federal government furloughs and reduction in contractor opportunities could lead to job losses and significantly less pay for workers and less tax revenue for local governments.

According to White House projections, defense furloughs in the D.C. area over the next seven months could affect nearly 150,000 workers to the tune of more than $1.1 billion in lost pay.

Mr. Vitner said some contractors could lose business immediately when the government tightens its purse strings, but he said sequestration is unlikely to show any wider-ranging effects for some time — and that’s only if Congress doesn’t do anything.

“I think we’ll hear a lot of talk of mass layoffs, but we’ll be a month or more down the line before we actually see them taking place,” he said. “It’s going to be a lot more gradual.”