EL PASO

COUNTY

COLORADO

EL PASO

COUNTY

COLORADO

Sequestration Impacts

Nicola Sapp

County Budget OfficerNovember 13, 2012

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Presentation Overview

• History • Sequestration Impacts From the Top Down– Non-Defense and Defense• Federal Impacts• State Impacts• El Paso County Impacts

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History

• The Budget Control Act of 2011 (BCA) allowed the United States to raise the Debt Limit in exchange for caps on Discretionary Program Funding designed to reduce the deficit by more than $1.2 Trillion over 10 years

• The BCA further created “Sequestration” which is a procedure to automatically impose across the board cuts if there was no agreement on cutting the deficit

• Sequestration is to begin January 1, 2013

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Sequestration Effects

• The Congressional Budget Office (CBO) estimates to be $109.3 Billion each year for ten years.

• Actual cuts are $984 Billion + $216 Billion that is saved in interest costs

• The cuts are to be divided between:• National Defense• National Parks• Education• Low Income Housing• Medical Research

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Who is Exempt• Exempt from cuts:

• Medicaid• Social Security• The Child Health Insurance Program (CHIP)• The Supplemental Nutrition Assistance Program (SNAP)• Veteran Benefits• Temporary Assistance for Needy Families (TANF)• Refundable Tax Credits

– Earned Income Tax Credit– Child Tax Credit

• Certain Federal Highway Programs

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Impacts from the Top Down- Federal Impacts

• $109.3 Billion in spending cuts annually• $54.7B in Defense spending annually• $54.7B in Non Defense spending annually• The President chose to exempt military personnel from

sequestration, therefore defense had to be cut by an additional 10% in other places– Operations– Equipment– Capital

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Impacts from the Top Down- Colorado Impacts

• Significant impact on Colorado budget• 25% of the State of Colorado is funded from

the Federal Government• Colorado will have to cut services• Job losses are eminent

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Impacts from the Top Down- Colorado Non-Defense Impacts

• $60 Million in Non-Defense Cuts• Education –No estimates on this impact yet

• Job Development–No estimates on this impact

•Health and Human Services –7.5% Annual Reduction–$16.75M Federal & State annual reduction

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Impacts from the Top Down- Colorado Non-Defense Impacts

• Colorado Center on Law & Policy estimates the state will lose–More than 1,600 jobs from the $60 Million in

Non-Defense cuts– Loss of 1,215 direct jobs– Loss of 416 indirect jobs

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Impacts from the Top Down- Colorado Non-Defense Impacts

Private Education Services 517Community Food, Housing & Other Relief Services 247Child Day Care Services 203Individual and Family Services 104Employment Services 74Food Services & "Drinking" Establishments 44Nursing & Residential Care Facilities 43Real Estate Establishments 30Legal Services 24Environmental & Other Technical Consulting Services 21

Top 10 areas of job losses from Non-Defense Spending CutsEstimated Jobs

Lost

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Impacts from the Top Down- El Paso County Non-Defense Impacts

• El Paso County Impacts – many undetermined• Education –No estimates on this impact yet

• Job Development–No estimates on this impact

•Health and Human Services –7.5% Annual Reduction–$5.4M Federal & State annual reduction

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Impacts from the Top Down- Colorado Defense Impacts

• Colorado is the home to a large number of Defense Contractors & Military Defense Facilities

• Colorado Can expect a 10% across the board cut in Federal Defense funds

• Up to $1.1 Billion in lost funding annually

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Impacts from the Top Down- El Paso County Defense Impacts

• 5 Military Installations in Colorado• El Paso County is the home for Four of them• El Paso County Direct and Indirect Military

Presence:• 80% Active Duty Personnel• 77% Civilian Personnel• 98% Total Family Members

– Thus, El Paso County can anticipate a loss of $4.71 Billion Annually

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Impacts from the Top Down- El Paso County Defense Impacts

• How Does the Military Impact El Paso County’s Economy?– In 2011, the Four Military bases provided an

economic impact of $5.89 Billion – Generating 25%-30% of El Paso County’s Gross

Metropolitan Product (GMP) (economic base)

– Based on this, the impacts could be 18,000 jobs lost in El Paso County

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In Summary

• Annual El Paso County Impacts:– Education $ ?,???,???,???– Job Development $ ?,???,???,???– Health & Human Services $

5,400,000–Military / Defense $ 4,710,000,000

Over 10 Years $47,154,000,000

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Sources of Information

• U.S. Department of Defense – Military Installation: www.militaryinstallations.dod.mil• The Greater Colorado Springs Chamber and EDC• Colorado Center on Law and Policy

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Questions?