As previously reported on Conduit Street, Governor Martin O’Malley’s Federal Relations Director, Dana Thompson, briefed county elected officials on the status of the congressional “budget supercommittee” that was formed as part of the federal debt ceiling law, the Budget Control Act of 2011, and its potential impact on Maryland during the 2011 MACo Summer Conference.

The Budget Control Act calls for substantial cuts over 10 years through 2021.  The initial deep cuts start in FY 2012 and FY 2013 and will total nearly $1 trillion over the 10 year period.  For the initial cuts, “security” programs, which include homeland security and defense, and “non-security” programs are protected by a “firewall” that will limit the amount of cuts to those areas.  During the initial cuts, discretionary non-defense programs are those primarily at risk, and programs will be in jeopardy of being terminated.

In addition to the initial cuts required under the Act, a 12 member “supercommittee” (6 House and 6 Senate with 3 Democrats and 3 Republicans from each house), the Joint Select Committee on Deficit Reducation, was created as part of the compromise to raise the federal debt ceiling under the recently passed Budget Control Act.  The supercommittee is charged with recommending $1.5 trillion in cuts by late November, which would have to be voted on by December 23.  If the supercommittee fails to make recommendations, $1.2 trillion in automatic cuts will occur by way of a “sequester.”  The cuts reduce the projected increases in federal spending and do not represent a reduction in baseline spending.

If the sequester occurs, Medicaid, Medicare, and social security are removed from consideration and remaining programs will be reduced by a total of $1.2 trillion dollars in “across the board” cuts  by January 2013 (including 50% in cuts to defense equaling $55 billion per year over 10 years and 50% in cuts to domestic programs totaling $55 billion per year over 10 years).

Based on discussion that took place during the session, additional materials have been provided.

• PossibleTimeline for 2011-2013 relative to major provisions of the Budget Control Act (this is for illustrative purposes only)
• Budget Control Act Presentation prepared by the Federal Funding Information for State (FFIS)
• Table created by FFIS showing estimated impacts of a possible sequester