- The Enterprise
- The Recorder
Government and industry in St. Mary’s County remain in a state of uncertainty — and, for many, frustration — after Congress backed away from the “fiscal cliff” on New Year’s Day but delayed decisions about scheduled deep cuts in federal spending.
While income taxes will not increase for most Americans as a result of this week’s deal, Congress simply postponed for two months deep across-the-board cuts to federal agencies, including the Department of Defense, the economic lifeline of St. Mary’s County. Federal legislators have given themselves two more months to determine how to trim federal spending.
This continued uncertainty “makes it all but impossible to plan effectively,” said Glen Ives, president of the Southern Maryland Navy Alliance and an executive at a company that supports operations at Patuxent River Naval Air Station. “I think this situation highlights and reinforces just how dependent we have become here in St. Mary’s County upon the federal government and how vulnerable that leaves us.”
Government and business leaders in St. Mary’s County will keep making decisions based on the unknown and focused on the “worst-case scenario,” Ives said. It’s “detrimental to industry and the overall economy.”
Companies with military contracts have already begun to restructure and reduce overhead costs significantly, Ives said. There’s little else they can do until Congress makes a decision about the scheduled budget cuts called sequestration, which could indiscriminately reduce federal agency budgets by about 7.6 to 10 percent.
Rep. Steny Hoyer (D-Md., 5th) said he “would have preferred a big, bold and balanced deficit reduction plan to replace the sequester.”
But, he said, progress is being made. “The agreement passed by Congress prevented irrational spending cuts from taking effect this week and gives us additional time to replace those cuts with a balanced deficit reduction plan that contains both spending cuts and revenues,” Hoyer said in an email statement. “In addition, the agreement we passed prevented an average tax hike of $2,200 on Fifth District families.”
While American families earning less than $450,000 will not see income tax increases, there will be a 2 percent increase in Social Security payroll taxes. The payroll tax was lowered for the last two years to help Americans weather the struggling economy.
As for cuts to government agencies, Hoyer said, “It’s unfortunate that we were unable to provide certainty to our community that the sequester would be replaced, but over the next two months, I will be urging my colleagues to enact a balanced plan to replace the sequester, reduce the deficit and support job creation.”
St. Mary’s County Commissioner Todd Morgan (R) said simply delaying the federal budget cuts is “like putting a Band-Aid over a bleeding artery.” But he’s trying to be optimistic.
“Money is being funded at Pax River at the same rate it was last year,” he said, referring to a continuing resolution that Congress and President Obama passed in the fall to prevent a government shutdown as they grapple with a solution to reaching the debt ceiling. That resolution will be effective until March 27, according to the U.S. House of Representatives Committee on Appropriations.
“The sky’s not falling,” Morgan said. He doesn’t anticipate excessive job loss in St. Mary’s because some of the funding to programs at Pax River was never slated for cuts. And, Congress has two months to develop a real solution. “I could be paranoid and panicking,” he said. “But ... we’ll take the good with the bad and we’ll figure it out.”