While those reductions are about the same 8 percent as the rest of the cuts, they comprise a large portion of the cuts states would have to bear under sequestration. What’s more, in many states education spending is dictated by state constitutions or court decisions, which could force legislatures to backfill the reductions.
“Those are big dollars,” says Chris Whatley, director of the Council of State Governments’ Washington office. “You can’t just make easy shifts in education funding.”
And in states with a heavy concentration of military installations, the pain could be worse. Military personnel spending is exempt from the cuts, but activities such as equipment maintenance, construction, procurement and research and development are not. That means tens of thousands of civilian Department of Defense and private sector jobs could be at risk, along with tens of billions in economic activity associated with that spending. Many defense contractors are already preparing pink slips for employees.
States would also be hit by more than $2.5 billion in cuts destined for the National Institutes of Health. Those reductions, which would affect grants that go to pharmaceutical companies and higher education institutions, could cost some states hundreds of millions in research and development dollars next year alone.
But perhaps the most varied effect of the cuts will be felt by the millions of people around the country who rely on federal grants to support social services and safety net programs. If those reductions are enacted, experts say, states would have to decide whether or not to replace them. Some would likely scale back or eliminate programs rather than fill in the gaps themselves.
The federal block grant for energy assistance, which states use to help low-income households pay heating and cooling bills, would be cut even though funding for it has dwindled in recent years. Nearly $550 million would be cut from special food assistance for women, infants and children, known as WIC. And federal funds that support various local housing, health and child care services would be cut as well.
Finally, the economic impact of the cuts would be felt with great force in management ranks at federal agencies. Much of the federal agency reduction would come at the expense of staffing, and federal employees would likely face layoffs and furloughs.
That would include many of the employees who would have to manage the sequestration process itself. Their jobs would be at risk, along with the services they provide. “Personnel is such a huge percentage of the cost,” says Marcia Howard, executive director of Federal Funds Information for States.
An Avoidable Cliff
For all the consternation over the looming cuts, they are still avoidable. Congress could approve an equivalent $1.2 trillion in spending reductions to stop the sequester, or simply delay it outright. The expiring tax cuts could be extended by Congress as well.
But so far, the political will has been lacking, even as most agree the fiscal cliff is an avoidable catastrophe. Lately, the conversation has been more about who’s to blame for the policy: Both Republicans and Democrats malign the rigid deficit-reducing rules, but have been hesitant to dismiss the ends, as the budget remains a top concern on the campaign trail.
Still, some suspect a post-election deal will be worked out during Congress’ lame duck session. Others say the fiscal cliff is more like a slope, and Congress could retroactively stop most of the cuts and tax hikes sometime next year, even if January comes and goes.
But with time slipping away, and control of both the White House and Congress up for grabs, there’s a growing sense of pessimism in Washington. Many say that even if Congress ultimately blunts the impact of the fiscal cliff, it’s increasingly likely the U.S. will at least temporarily careen off of it in early 2013.
That’s left a situation where states are preparing for the worst while hoping for the best. As time passes, the concern is palpable. As Whatley of the Council of State Governments sums it up, “All of these things are going to hurt.”
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