The combination of impending sequestration, slowing federal spending, and ongoing budget uncertainty is pushing this region towards a fiscal cliff. 

The federal government has been the economic driving force in metropolitan Washington for decades. As a result, the automatic spending cuts created by the Budget Control Act of 2011 will disproportionately impact our region, and may result in a loss of up to 450,000 public and private sector jobs.  

The Council of Governments has developed this site to provide timely and relevant information for our members and stakeholders on sequestration impacts, legislative alternatives and their progress/impact.  It is a one-stop shop that provides: region-specific information, impact analysis by partner public interest organizations and state/local governments, and action alerts with information on when and where to reach out.   

BOT-COG Letter: Sequestration Must Be Avoided

The Metropolitan Washington Council of Governments and Greater Washington Board of Trade sent the following joint letter to Congress on February 21, 2013:

Sequestration will have a destructive impact on localities in the National Capital Region and stymie an economy which is beginning to revive.

The Greater Washington Board of Trade and the Metropolitan Washington Council of Governments have previously expressed our concerns to you. Together, we write again to urge Congress and you as our elected representative to take immediate, thoughtful action to stop the impending sequestration on March 1. The automatic across-the-board cuts, as opposed to thoughtful deficit reduction, will have a debilitating effect on an already fragile economy.

Sequestration will have enormous ripple effects throughout the entire Region, much more so than any other metropolitan area in the country. According to George Mason University experts, 400,000 job losses are expected to occur in the National Capital Region alone. These startling figures do not include the second tier of support workers who will also be hit hard and, plainly, are likely to lose their jobs.

Compounding the major implications that these cuts will have for business in the Greater Washington region, the lack of clear information about these reductions causes unnecessary concern. To date, the federal government has given very little guidance, and those directives which have been given often conflict with prior instructions. This uncertainty about funding is debilitating to businesses and local governments, which are trying to budget strategically and plan for the future.

Sequestration affects the local ability to raise funds for facility costs which is critical to jump- starting the economy. National rating agencies are advising our localities that the cloud of sequestration is already negatively impacting their bond ratings. The arrival of sequestration will further adversely affect these bond ratings. Simply put, construction of public improvements through bond issues will become much more expensive, if possible at all. As a result, much needed public works will not proceed, and local private contractors who would have constructed the facilities will lose the contracts. So sequestration means tax dollars will buy fewer necessary facilities, infrastructure will continue to deteriorate, businesses will not have work, and their employees will be more likely to lose their jobs.

Another prime example of how sequestration cuts will ripple is evident in the Metro transit system.  Sequestration will have a profound adverse impact on Metro’s dedicated capital funds, resulting in a direct loss of up to $12 million in Federal Fiscal Year 2013. Moreover, analysts predict that millions of Metro’s capital “formula dollars” could also be reduced significantly. Such a loss further complicates the agency’s critical rebuilding efforts. Compounding these losses, Metro estimates that sequestration will result in a reduction of millions of dollars annually in fare box revenue due to furloughs in the federal workforce and a reduction in ridership of federal employees. Simply stated, people who lose their jobs will not need transit to go to work. These sequestration-related reductions result in a significant decrease in Metro’s capital funds and operating revenues – funding that the Metro system cannot afford to lose.

The foregoing are but two examples of the negative impacts of sequestration.

Greater Washington’s business and government leaders recognize that the national economic challenge is great, requiring the federal government to get its fiscal house in order. However, we strongly encourage you to adopt a bi-partisan balanced solution to deficit reduction that promotes rather than undermines our economic growth.

We would be glad to talk with you in person or assist with testimony before Congress regarding
the severe impacts of sequestration. Please contact us.

Sincerely,

James C. Dinegar, CAE
President & CEO
Greater Washington Board of Trade

Karen Young
Chair, Board of Directors
Metropolitan Washington Council of Governments

Nonprofit Roundtable: Sequestration’s Impact on Area’s Most Vulnerable Residents

The Nonprofit Roundtable of Greater Washington shared an analysis of the impact of sequestration will have on area nonprofits and the residents they serve. It’s another reminder that these cuts have real consequences and it is the most vulnerable people whose lives will be most affected.  

Sequestration means

• Tens of thousands of children and new mothers not served by nutrition programs during a time that emergency food banks’ are struggling to keep the shelves stocked.
• Housing vouchers for low-income families will be cut while shelters in the region are at capacity
• Head Start and Early Head Start services would be eliminated for approximately 200 children in the District of Columbia, reducing access to critical early education.  Up to 800 disadvantaged and vulnerable children in Maryland and Virginia could lose access to child care, which is also essential for working parents to hold down a job.
• $2 million in funding would be cut that provides meals for senior citizens

Read more at: http://nonprofitroundtable.org/blog/755-take-action-against-sequestration

Principi, Young, Other Regional Leaders Discuss "Fiscal Cliff" Deal

Although Congress and the President acted to stop most of the "Fiscal Cliff" tax increases from going into effect, the decision on the associated spending cuts has merely been delayed by two months. COG's 2012 Board Chairman Frank Principi and other regional leaders were recently interviewed on WUSA 9 about the deal. And COG's 2013 Chairwoman Karen Young was quoted in the Frederick News Post.

Area Leaders Call Fiscal Cliff Deal an Important Step, but More Work Needed to Stop Sequestration

Leaders of the Metropolitan Washington Council of Governments said Congressional action to prevent drastic tax increases on many Americans is an important step, even though it does not prevent the across-the-board federal budget cuts that are likely to hit this region especially hard.

The cuts, known as sequestration, apply to defense and nondefense discretionary programs and put as many as 450,000 jobs in metropolitan Washington at risk. In November, the Council of Governments sent a letter to Congress urging officials to stop sequestration and adopt a bi-partisan plan to reduce the deficit.

“We hope yesterday’s limited action means that Congress will continue to work in the days to come to reverse the serious effects of sequestration before they can take full effect,” said Prince William County Supervisor Frank Principi, who serves as the Chairman of COG’s Board of Directors. “The American people need Congress to continue its work to support local economies across the country and especially in metropolitan Washington.

Noting fundamental economic changes are coming, COG’s leaders have also stressed the need for greater regional cooperation and promoted Economy Forward, a plan to strengthen metropolitan Washington’s competitiveness.

“Because we knew reduced federal spending was a real possibility, area leaders decided to be proactive and start preparing our region for significant, long-term changes,” said City of Frederick Alderwoman Karen Young, COG’s incoming Chairwoman. “We developed a plan to help diversify our region’s economy, build on emerging industries, and attract and retain new businesses and workers.”

In 2013, the Council of Governments will implement its Economy Forward plan through projects to identify and fund transportation priorities, invest in mixed-use activity centers, and focus on regional workforce development needs.

The Council of Governments and its partners will also analyze how changes in federal spending will affect the governments in Virginia, Maryland and the District of Columbia, as they budget for schools, transportation, and other critical services. COG will share this information and relevant news on this site.

AU/NARC Report Focuses on Decline of Federal Spending in Key Regional and Local Programs

A report by American University for the National Association of Regional Councils (NARC) outlines and tracks by state the overall decline of federal spending in key regional and local programs. "While the report shows clear and consistent declines in every category, in every state, these domestic spending programs are often held up as being the problem with the Federal deficit," said Fred Abousleman, NARC Executive Director. "Our regions and local governments have continued to do more with less – keeping more elderly fed, kids out of jail, roads repaired, water safe to drink, and emergencies responded to, while funding continues to decline." To read the report, click here.

Montgomery County's Tim Firestine Discusses Muni Bonds and Fiscal Cliff in New York Times

Article focuses on how municipalities and other groups are working to prevent a proposal to tax muni bond interest. To read the article, click here.

Alice Rivlin on the Fiscal Cliff, region's long-term outlook

Alice Rivlin, a senior economist at the Brookings Institution and an expert on the federal budget, said she believes the President and Congressional leaders will reach an agreement to avoid the mandatory tax and spending cuts known as the Fiscal Cliff. Speaking at the Annual Meeting of the Council of Governments, Rivlin called the budgetary predicament they face an "artificial, elementary problem."

COG leaders discuss fiscal cliff, regional economy on NBC4

COG Board Chairman Frank Principi and COG Executive Director Chuck Bean were interviewed on NBC4's Viewpoint show, which originally aired on December 2, 2012. They discussed metropolitan Washington's future, focusing particularly on the region's economy, the impending fiscal cliff, and Economy Forward, COG's plan to make the region more competitive in a new era of decreased federal spending.

Economy Forward Identifies Actions to Strengthen the Region's Economy amid Major Changes in Federal Spending

Urgent action is needed on issues like workforce development and transportation funding in order to maintain and improve the region’s economic competitiveness, according to the COG Board's Economy Forward report.

Economy Forward was developed after several special sessions with industry leaders, area economic development directors, and experts. To read the report or watch videos of the sessions, click here.

To receive email alerts related to the fiscal cliff, federal spending, or Economy Forward please visit mwcog.org/subscribe and add "Fiscal Cliff Updates" to your subscriptions