Washington area government officials are preparing an economic shield for the wave of automatic federal spending cuts – sequestration - that may hit Metropolitan Washington in January.
“We have the perfect storm with the Bush era tax cuts that will be expiring…and I’m not certain we’ve got political consensus from Capitol Hill regarding the federal budget, the deficit and sequestration,” said Frank Principi, Metropolitan Washington Council of Governments (COG) Board of Directors Chairman.
Leaders from the National League of Cities and the National Association of Regional Councils briefed the COG Board of Directors, comprised of 22 local government officials and members of the United States Congress, on the impact of sequestration at the October COG Board meeting Wednesday.
Principi worries that sequestration – automatic cuts in federal spending – is “the most important threat” to the D.C. area economy.
Sequestration of $1.2 trillion will go into affect this January, if the congressional committee assigned to writing the federal deficit-reduction plan does not agree on legislation by Nov 23. Sequestration will come in waves of cuts spread out between 2013 and 2021. This process is outlined in the 1985 Gramm-Rudman-Hollings Act.
These federal spending cuts could trickle down to a loss of 450,000 jobs in greater Washington area. The cuts could hit hard in the District where there is already an 8.8 percent unemployment rate, which is higher than the national average of 7.8 percent.
“Sequestration may not well matter in the long run,” said Fred Abouselman, Executive Director of National Association of Regional Councils. He advised COG that funding cuts are likely whether or not the super committee writes a deficit-reduction plan.
“We here at COG are going to be proactive,” said Principi, in regards to the possibility of a “major shift” of D.C. area funding.
COG is working on implementing its Economy Forward plan, a 5-point plan to fortify “a more competitive metropolitan Washington” in the wake of federal funding cuts.
“The main point of the Economy Forward report…is getting away from the idea that we can be reliant on the federal government for economic prosperity,” said Lewis Miller, COG spokesperson.
The Economy Forward report is a metro Washington-focused plan that shifts the D.C. area economic focus from the federal government onto the private sector.
The primary focus of the report is improved transit and workforce development and better coordination between local jurisdictions and federal government. COG will help identify potential funding.
The Economy Forward Implementation Plan calls on regional governments to:
- Work with senior Administration officials to identify an official to serve as a federal-regional liaison to improve partnership.
- Implement a plan that will guide more efficient investments in the region’s Activity Centers so that more of them have the right mix of housing, jobs and access to transit.
- Undertake an industry and labor market analysis to ensure that workforce development programs are training people for current and future growth sectors.
- Use the data from the industry and labor market analysis to inform the development of a new brand that promotes the region’s economic diversity.
- Implement a transportation priorities plan to garner broad-based public support and produce sustainable funding strategies.
“Getting some of those things in order would make us more competitive,” Miller said. “Even if sequestration doesn’t happen, reduced federal spending is going to happen, so getting away from being overly-reliant on that [federal funding] is the key game.”