Threat of Sequestration Hits Howard County Economy, Officials Say

Local business and political leaders are speaking out about possible harmful effects to the local economy if the federal government’s plan to make automatic cuts, dubbed sequestration, happens next month.

“The worst part about it is the lack of predictability,” said Howard County Executive Ken Ulman, on the C4 Show Thursday morning.

Without action from Congress, the sequester would go into effect automatically on March 1, reducing spending in a number of areas, including education, the environment, health, military and law enforcement, the White House said.

On the show, Ulman said the federal government hasn’t provided information about what jobs will be cut or furloughed due to the pending sequestration.

“We have lots of folks that work at Fort Meade,” said Ulman, on the radio show. “We’re at war, this cyber war… to think that we’d reduce the workforce at Fort Meade or the people who are protecting our networks, that doesn’t make sense.”

“Just tell us what the cuts are and we’ll figure out how to adjust,” said Ulman.

In Maryland, the White House said if sequestration were to take effect, it would include funding cuts to teachers and schools, work-study jobs on college campuses, Head Start programs and environmental funding.

A White House report also said sequestration in Maryland could mean furloughs for 46,000 civilian Department of Defense employees, reducing gross pay by around $353.7 million.

Pam Klahr, the president and CEO of the Howard County Chamber of Commerce, also criticized the unpredictability of the cuts.

“Chamber members have been saying since last year that the uncertainty surrounding the federal budget – from the Fiscal Cliff to the latest threats of major cuts -- is discouraging them from expanding their operations and hiring more employees,” said Klahr in a statement. “Businesses need predictability. The uncertainty causes great distress, and businesses are in a wait-and-see mode.”

Determining the exact number of federal employees in the county is difficult. The Chamber estimates about 50,000 county residents are a federal employee or government contractor.

The American Community Survey estimated about 19,000 people are employed by the government in Howard County, although they did not break it down by federal, state, or local government and that number did not include government contractors.

The cuts would also impact both domestic and defense programs such as weapons purchases, Medicare, farm subsidies, and unemployment benefits, according to the Bipartisan Policy Center. The Center noted $85.3 billion is slated to be cut from the federal budget in fiscal year 2013.

Maryland Senator Ben Cardin wrote in a recent blog that “sequestration will result in a meat ax approach to reducing our deficit.”

“The federal government is a major employer and a huge contributor to the local economy on every level,” said Maureen Thomas, executive director of GovConnects at the Howard County Chamber of Commerce. “Everyone from the dry cleaners to the local schools, everyone is going to be affected by this.”

Thomas said GovConnects, which works to connect county businesses with the growing federal security industry in the area, is attempting to provide the most current information about potential cuts.

Thomas said the uncertainty about what will be cut is causing businesses to slow down.

“They’re afraid to hire, everyone is holding their breath,” said Thomas about the doubt permeating the industry due to sequestration.

But there's one sector that remains bullish, the cyber security business, according to George Santos, a senior vice president for Manekin Real Estate. Santos, along with Luke Allen, lead the government services department for Manekin.

He named off local cyber security businesses (Ventura Solutions, Convergence Technology Consulting, Clear Edge IT)  that are growing or had recently exapanded their corporate offices.

"While defense-related companies are getting hit, specifically weapons systems, cyber should backfill that to some point," said Santos.

He said that while the local economy may feel some income growth delay and some job loss, it's important that the country address its deficit problem.

"As I talk to my peers across the country, they would trade places with us in an instant," said Santos.