San Diego County Economy Facing Uncertain Future if Sequester Shrinks Budgets

A political deal struck in the summer of 2011 will begin to affect the economy in late winter 2013, unless feuding lawmakers in Washington can agree on a compromise by Friday.

The sequester will mandate significant cuts to the federal budget, with few if any government agencies immune to reductions in funding. Defense and domestic spending will be evenly slashed, and the impacts on local economies are far from clear.

The cuts could trickle down to 23 Santee companies that did business with the Department of Defense last year to the tune of $17 million. According to the Center for Defense Policy, these Santee companies did more than $100,000 worth of business with the Pentagon in 2011.

San Diego County has almost 70,000 federal employees and retirees, according to Eye on Washington, and their fate could include furloughs or worse. Media reports include warnings on delays in air travel and tax refunds. Civilians employed by the Department of Defense face the possibility of furloughs.

“The possibility exists for a 22-day furlough of Federal employees,” said Brian O’Rourke, spokesman for Navy Region Southwest.

“Sequestration presents a serious threat to jobs and our economy. Across-the-board cuts to federal programs would hurt families across San Diego County,” said county Supervisor Dave Roberts. “This is especially bad news as the nation is trying to climb out of the recession. It couldn’t come at a worse time.”

The San Diego Military Advisor Council estimates that between 4,000 and 5,000 ship repair jobs will be lost due to fewer surface ship availabilities, a loss of $219 million to the local economy.

The Obama administration released on Sunday a report for each state detailing the impacts of the sequester’s budget cuts, and Republicans have accused the president of using scare tactics for political gain.

The seven-page report for California paints a grim picture for education, environmental protections, the military, law enforcement, child care, public health and government services. The report is attached to this article in the PDF section.

The nation has been through this drill before. The sequester was set to begin on Jan. 1, 2013, if lawmakers weren’t able to reduce the budget deficit. That deadline came and went, but they were able to agree on postponing the sequester for two months. That time is running out.