Sequestration ‘would be a disaster’ for Maryland -- Gazette.Net


Now that the presidential and congressional elections are over, many Maryland business leaders want to see some movement on the federal sequestration issue, part of the so-called “fiscal cliff” — and quickly.

The sequestration could trigger major budget cuts of about $1 trillion during the next decade to offset debt ceiling increases of as much as $2.1 trillion, if Congress does not change the plan by Jan. 2.

“First things first. It’s time to get this resolved,” said Georgette Godwin, president and CEO of the Montgomery County Chamber of Commerce.

She said she is optimistic that Congress and the White House will come up with a resolution in the lame-duck session.

The cuts would affect not only federal agencies, such as the National Institutes of Health in Bethesda, which faces an 8.2 percent budget reduction — about $2.5 billion — under the plan. Large contractors such as Lockheed Martin of Bethesda and smaller ones such as Gaithersburg software training company Officepro would be hit, too.

Maryland is more reliant on federal contracts and grants than most states. Businesses in the state received $26.5 billion in federal procurements in fiscal 2010, or $4,600 per capita, according to the most recent annual report from the Maryland Governor’s Grants Office.

Maryland ranked second nationally on the per-capita basis in procurement and third in total per-capita federal funds, which also includes grants, federal salaries and other payments.

Even small businesses that aren’t receiving contracts or subcontracts would be hurt by sequestration, said Ellen Valentino, Maryland state director for the National Federation of Independent Business.

“There is a lot at stake,” she said.

If all the cuts kick in as scheduled, the U.S. economy could return to a recession, said Aris Melissaratos, a senior adviser to the president of Johns Hopkins University in Baltimore and former secretary of the Maryland Department of Business and Economic Development.

“It would be a disaster,” he said.