Official: Fed cuts could impact area programs

Before the end of the year, Congress must agree on a plan to reduce the federal deficit or face drastic, automatic across-the-board cuts to almost all federal programs totaling more than $1 trillion over the next 10 years.

In Washington-speak, the cuts are known as budget sequestration, and two months before deadline, there is not much information on how it will proceed.

But some local entities who rely on federal funds are still trying to quantify how much the process could hit them.

“Does sequestration affect the Grand Forks Housing Authority? You betcha,” said GFHA Executive Director Terry Hanson.

He is bracing for a cut to the authority’s rental assistance program of just under $500,000 from the federal department of Housing and Urban Development.

“That means we could assist about 100 fewer families,” he said.

Based on the rough outlines of how the cuts would occur, Hanson also expects to lose about $52,000 to $58,000 in money for salaries, enough for one full-time employee, as well as $160,000 to $200,000 the agency receives for managing low-income housing.

Hanson’s agency is just one of myriad beneficiaries of the federal budget that encompasses everything from housing to education to health care.

According to the Center on Budget and Policy Priorities, if sequestration went forward, for 2013 it would mean an 8.4 percent cut for most non-defense discretionary programs, a 7.5 percent cut in affected defense programs, an 8 percent cut in mandatory programs except Medicare, and a 2 percent cut in Medicare payments to providers.

“When we penciled it out it came out to be $3 million to $5 million a year,” said Dwight Thompson, chief financial officer for Altru Health System in Grand Forks.

Medicare provides about a third of Altru’s payments for services, and a 2 percent cut in provider payments would amount to about 1 percent of Altru’s revenue. What Thompson is also worried about is how sequestration might cut funding for things such as veterans programs and other services that help people afford medical care.

“What we don’t know is how it trickles down,” said Thompson, who hopes for action by Congress before sequestration happens.

“I hope they get their act together,” he said.

Harsh cuts

Sequestration is harsh by design. It was created in 2011 as an incentive for Congress to form a plan to reduce the deficit or face slashed funding for popular programs. President Barack Obama said during the third presidential debate last Monday that sequestration “will not happen.”

The White House’s own outline of sequestration, released by the Office of Management and Budget in September, paints an ugly picture of the process.

“As the Administration has made clear, no amount of planning can mitigate the effect of these cuts,” said the introduction to the OMB report. “Sequestration is a blunt and indiscriminate instrument. It is not the responsible way for our Nation to achieve deficit reduction.”

The document is 394 pages mostly listing federal programs matched with funding, percentages of cuts and dollar amounts. It was a requirement of the Sequestration Transparency Act passed by Congress this year and co-sponsored by Sen. John Hoeven, R-N.D.

“Unfortunately, the report OMB produced didn’t have enough specificity,” said Hoeven spokesman Don Canton. “Sen. Hoeven believes we need to address it as soon as possible after the election.”

Sen. Kent Conrad, D-N.D., has participated in efforts to fix the deficit through his work in the bipartisan “Gang of Six” senators who worked on a long-term deficit reduction proposal. Though he will retire when his term ends after 2012, he along with Hoeven will face the task of creating a new plan in the lame duck session before the new Congress convenes next year.

Limbo

Waiting to find out whether sequestration will happen leaves recipients of federal money in limbo for now.

“It’s fair to say that none of us has a clue what will happen,” said Jerry Combs, director of the U.S. Department of Agriculture’s Human Nutrition Research Center near the UND campus.

Not knowing is nothing new for the lab, which is funded under a temporary continuing resolution until March. It already has four open scientist positions has recently taken a 13 percent budget reduction. Combs said he hopes the unfilled jobs and budget reductions would soften the hit from sequestration.

“Our official position is to wait and find out what Congress does,” he said. “Our task is not to worry about that but worry about the science we do.”

With the clock ticking until the end of the year and big questions on what will happen after the election, Combs is not alone in waiting and watching.

“I haven’t paid so much attention to the workings of Congress since I was in 7th grade civics,” he said

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