Moran and Connolly: Sequestration Likely

What will it mean for the Northern Virginia economy in general and Reston in particular?

Sequestration — $1.2 trillion in automatic spending cuts to defense and civilian programs over the next decade — will likely happen, and it will mean thousands of layoffs, program eliminations and near-certain economic devastation for Northern Virginia,  Virginia Congressmen Jim Moran (D-8th) and Gerry Connolly (D-11th) said on Saturday at a town hall meeting in Mount Vernon.

"You need to be aware that this is probably going to happen," said Moran, who spoke at an annual meeting conducted by Mount Vernon District Supervisor Gerry Hyland. "It's a democracy and things will ultimately play themselves out, but things are not going well right now (in Congress)."

Congress averted the fiscal cliff crisis at the beginning of the year, and sequestration cuts were postponed until March 1. The Economic Policy Institute says that the cuts will result in 689,000 job losses across the country this year, and will slash GDP growth by 0.6 percent.

In Virginia, the State House Appropriations Committee estimates that sequestration will cost more than $330 million in tax revenue, and 60 percent of job losses are expected to come from Northern Virginia. 

Sequestration could have an impact in Reston, where hundreds of firms depend on goverment contracting, and thousands of workers are employeed by various agencies and companies that could be affected.

Mark Ingrao, President and CEO of the Greater Reston Chamber of Commerce, says many members of the chamber have already begun preparing for sequestration by leaving jobs unfilled or holding off on capital investments.

"We are seeing an impact already, and it hasn't even happened," he said. "Once it happens, it will be be pretty devastating. "

Ingrao says larger contractors such as Northrop Grumman will be able to adapt and refocus efforts from government to commercial contracts. It will be harder for smaller companies with fewer resources, he predicts.

And all businesses - restaurants, stores, service companies - may feel the pinch.

"If sequestration happens, there are going to be layoffs," said Ingrao. "If layoffs happen in Northern Virginia, people are not going to have the money to go to restaurants."

Ingrao says the Chamber is working on resources to help members cope with sequestration.

It is unlikely that Republicans and Democrats in Congress will reach a deal on a deficit reduction plan, said Moran. "This is something that should have been avoided. And it's not just this one-time sequester in March. It continues for an entire decade," he said. 

Connolly said that sequestration could put the economy back into a recession.

"Unfortunately it probably is going to happen, at least for a while. So, we all have front-row seats living here, and by all means let your voices be heard," he said. "Here we are, doing well in Fairfax County — a 4.1 percent unemployment rate. We don't want to kill that with a mindless approach."

The automatic reductions are estimated to slash state and local education funding by 36 percent, funding in housing and community development by 28 percent, taking 18 percent from spending on health and the environment and reducing public safety and disaster response investment by 5 percent, according to a county memo handed out at a South County Federation meeting in January. 

"The biggest threat now facing Fairfax County is sequestration," said the memo.

Virginia Gov. Bob McDonnell (R) recently told the Washington Post that sequestration will mean 130,000-200,000 job losses for the Commonwealth. “It damages our national security and is disproportionately unfair to the state of Virginia,” he said. “I will continue to lobby against it.”  

Virginia Del. Scott Surovell (D-44th) said that the Governor needs to press Congress to act. "The most important factor is the Governor's involvement and how hard he's willing to push," said Surovell to Patch. "In the short term, the main tools we have at the state level are extending and improving unemployment benefits. We can also create at least $500 million in jobs by retrofitting our schools and other public facilities with solar and energy efficiency projects funded by the revenue from the revenue saved by lower energy costs.

"In the long-term, the best way to stimulate the Northern Virginia economy and make us less dependent on government-sector jobs is to extend Metro, invest in transportation infrastructure and invest in our people through education so that the private-sector economy has the foundation for expansion," said Surovell. 

Sharon Bulova, chair of the Fairfax County Board of Supervisors, told Patch that the effects of sequestration are already being felt.

"Just the threat of sequestration is causing uncertainty among the corporate community in Fairfax County, and already businesses are choosing not to fill vacant space, not to make a move that otherwise they may have made as we are coming out of the recession years," said Bulova. "We're already seeing the effect of that on our revenues. What Fairfax County has done to protect ourselves is to put money aside when we adopted our carryover budget at the end of the year. We saved about $8 million as a hedge against what we think are going to be potential reductions and negative effects on the County."

The uncertainty makes budgeting difficult, said Fairfax County Executive Ed Long.

"Sequestration, before it gets addressed in March (by Congress), will impact the county and it will impact the state, probably after our budget is put together, and our ability to deal with things once the budget is put together is very challenging," said Long. "We will be impacted. We will have job loss in this area. So, people will not be going out and spending as much as they would like to. It will have an impact on everything we do in the county, but we don't know what that is."

Bulova said she's glad she's not serving in Congress. "Local government is, in my mind, at a much more effective level where you're able to roll up your sleeves and make some tough decisions," she said. "Congress is a larger, more difficult body and it's not an easy place for our representatives to be serving. But I know they're doing their best to bring this to a conclusion. I would hope so."      

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El February 05, 2013 at 03:30 PM
Ingrao says if sequestration happens and people are laid off they won't have money to go to restaurants. Gee, so sorry. Ever hear of cooking at home? People need to learn to adapt to circumstances. What a lame remark.
restonresident February 05, 2013 at 04:02 PM
You missed the point. He's not saying "Poor us, we won't be able to go out to eat." The preceding sentence says .."And all businesses - restaurants, stores, service companies - may feel the pinch".
Karen Goff February 05, 2013 at 05:24 PM
I think he means it will affect all businesses. Yes, not such a big deal to eat at home - BUT if you are small business owner, things could get very rough across the board. So while the person who owns a restaurant might not lose big government contracts, his customers likely work for firms who do, so that means the restaurant owner will suffer too.
michael February 05, 2013 at 05:43 PM
It's all Bush's fault!
Java Master February 09, 2013 at 06:40 AM
There is much waste in current Pentagon spending programs. There is ample room to make necessary cuts in defense spending without compromising our national security. But to insist that the Northrn Virginia economy should somehow be excluded and rendered invulnerble to such spending reductions is silliness. Let the chips fall where they may.


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