In this undated photo, engineer Aaron Wiser employs the newest technology for his work at the Arnold Engineering Development Center in Tullahoma, Tenn. The civilian workforce could be cut due to a federal government shutdown. (Photo courtesy of AEDC)
Washington’s self-imposed fiscal cliff is looming again with very serious consequences for local government should we plunge over it.
On March 1, across-the-board, arbitrary cuts to current year and future federal spending will take place unless legislation is enacted that avoids such reductions.
The cuts, also called the sequester, will cut $1.2 trillion from the federal budget – $984 billion split evenly over nine years and $216 billion in debt service savings – half from defense and half from domestic spending. On the domestic side, $322 billion will be cut from discretionary spending, $116 billion will come from reductions to Medicare payments, $7 billion from the Patient Protection and Affordable Care Act and $41 billion in other mandatory cuts.
“These cuts are not smart. They are not fair. They will hurt our economy. They will add hundreds of thousands of Americans to the unemployment rolls,” President Barack Obama said about the sequester Tuesday in a press conference.
Fortunately for Rutherford County, the local government doesn’t get much from the federal government and most of what it does get comes in the form of grants.
“They can’t cut the grants they’ve already given us,” Rutherford County Finance Director Lisa Nolen explained. “But, in general, those grants may not be there next year.”
The county only receives $12.5 million out of a $424.2 million budget in 2012 from the federal government, excluding funds given directly to Rutherford County Schools, Nolen said.
Only $644,000 goes directly in the county’s coffers, and that is for community development, homeland security and the Sheriff’s Office.
The remaining $11.9 million of that sum is funneled to RCS through the county’s cafeteria fund for the National School Lunch Program, which provides free and low-cost lunches to at-risk students.
The lunch program and other child nutrition programs are exempt from the sequestration. Other exempt programs include Social Security, refundable tax credits to individuals, and low-income programs like the Children’s Health Insurance Program, Supplemental Nutrition Assistance Program, Temporary Assistance for Needy Families, and Supplemental Security Income.
Other than the school lunch funds, Rutherford County Schools received another $18.5 million directly from the feds in 2012.
And it’s really too early to tell how the sequester will affect Rutherford County Schools, RCS Community Relations Coordinator James Evans said.
“Special education and Title I funding potentially would be the most affected, but it is unknown at this time to what extent,” Evans said.
But just like the rest of the county, the impact won’t be felt until next year when grants are awarded at the beginning of the next fiscal year, which is Oct. 1, 2013.
Should the sequester go through, the biggest cuts will be seen in defense spending. The biggest impact will be seen at Arnold Air Force Base in Tullahoma.
“Sequestration may affect the complex’s ability to do important work, which could harm national security. All services or facilities which employ civilian personnel will be affected to some degree and there will be adverse effects in the economies of local communities,” said Raquel March, who is a representative from the base.
The sequester cuts will require all military services and defense agencies to furlough most defense department civilian employees for an average of one day per week for up to 22 weeks beginning Apr. 25.
The defense department expects to furlough around 80 percent of its civilian workforce if necessary, which will save up to $5 billion.
But the defense department still has hope that an agreement can be reached by Friday.
“Congress can do the right thing,” Obama said. “We can avert just one more Washington manufactured problem that slows our recovery, and bring down our deficits in a balanced, responsible way.”