- The Enterprise
- The Recorder
Business and community leaders associated with Patuxent River Air Station have found some reasons to remain optimistic in what is shaping up to be an even leaner budget year.
With a federal fiscal plan in place as of this month, work days and the bottom line should be more predictable than they were last year when sequestration led to unpaid furlough days, across-the-board budget cuts and a partial government shutdown. But it’s still going to hurt, they say, especially for the defense contracting community here.
“We’re in a more stable situation,” said Del. John Bohanan (D-St. Mary’s). Lawmakers in Washington, D.C., have shown some willingness to move ahead, he explained. “Here’s the key thing ... there’s a certain bloc of members of Congress who realize you can’t shut down the government when you don’t get what you want.
“The shenanigans of a government shutdown, I think, are over,” he said. “Things even like the furloughs are highly unlikely.”
Congress managed to put political differences aside this month, and Democrats and Republicans passed an appropriations bill that will fund the government for the remainder of the fiscal year.
That decision is expected to cut down on the rampant uncertainty of 2013 — when at Pax River aircraft testing stopped, security forces searched for ways to man gates and continue patrols with strained resources, federal workers lost pay and the government essentially shut down — keeping thousands of federal workers off the job.
Last year, there were also warnings of federal worker layoffs and leaders planned for what the Navy calls reductions in force, or RIFs. Bohanan doesn’t think there will be much net loss in the federal workforce here, but he thinks there will be some significant changes.
“You have a lot of people who are going to be leaving, who have just gotten fed up with it. We have a lot of people eligible for retiring,” Bohanan said. But “I also heard that we could be hiring up to 2,000 civil servants at Pax River.”
Contractors, however, might have a different experience. Whatever affects the Navy at Pax River affects, often more severely, private industry supporting it. “The nature of our business is that if there is a cold inside the fence” at Pax River, Bohanan said, “it could be a flu outside the gate.”
Military research and development will see nearly $7 billion in cuts, according to the House Appropriations summary of defense appropriations for 2014, and there will be $7.5 billion in reductions for equipment procurement. Both procurement and research and development take place at Pax River, but Bohanan said those cuts in the Defense Department budget do not directly reflect the workload and funding that will come to the base here. The Pentagon will be making specific budget decisions throughout the year.
Massive budget cuts known as sequestration are still in play and the Department of Defense has to make the most aggressive cuts among federal agencies.
“Let’s accept the fact that the budget is flat,” said Todd Morgan, a defense contractor who also serves as a county commissioner from the Lexington Park district. “I think you’re going to see contractors laid off,” he said. “It’ll start happening sooner rather than later.
“We’re going to feel cuts here,” Morgan (R) said. “I expect that to happen. I just don’t know how big or how much.” Like others in government and industry here, Morgan is putting much of his hope in long-term strategies to decrease dependence on Navy dollars, build infrastructure and attract businesses that support other government agencies and have a wide range of commercial clients.
Part of the challenge for some industry workers now, Morgan said, will be finding work after their contracts have ended, been outbid or are lost. In the past, those workers would often find employment with the company that won the bid, or find work on another project within the company.
Bohanan said it’s probably the first time in about 20 years where “you’ve seen winding down and not as much coming along to replace it.” Many years of providing support to wars in Iraq and Afghanistan led to a robust economy.
Now, Bohanan said, people are feeling the change. “There are some that are hiring,” Bohanan said. “And, there are some that are downsizing, losing contracts.” Companies don’t talk much about it, he said, because they want to appear resilient.
As contracts are being “low-balled” here, Morgan said, some workers are now making the hours-long commute to and from Washington, and in many cases are getting slight pay raises. “I don’t think it hurts St. Mary’s,” Morgan said. But it’s brain drain. “I think it hurts the Navy.”
“We have been on a growth cycle for two decades,” Bohanan said. “And it’s hard to sustain that kind of growth, especially when you have over-dependence on one source.” Estimates are that about 85 percent of the economy in St. Mary’s relies on what happens at Patuxent River Naval Air Station. “We’re coming into a period of reset,” he said.
“My first thought is maybe I’m more concerned about the longer term than 2014,” said Glen Ives, a defense industry executive and former commanding officer at Pax River. “I think the good news is the government has been having sessions and forums to fine-tune these policies. They have been listening to industry. And, we have to continue that kind of relationship.”
But, “it’s very challenging,” he said. “I shouldn’t sugarcoat it. We’re going into an era now where there’s going to be less spent on defense ... Sequestration is a 10-year cycle and we just went through the first year.
“You stand to adjust to a new normal,” Ives said. Funding is restricted, but the tone seems to be calmer than last year.
“I think folks are kind of fatigued,” he said. They’ve been working to implement new policies, trying to keep their businesses profitable. And, Ives said, “there’s very little we can do about what’s happening at the national level.”