Administration Memo Outlines Effects of Sequestration on Maryland

As reported by the Washington Post, a recent memo prepared by the O’Malley administration outlines the effects of federal budget cuts on Maryland due to sequestration.  Whereas, grant funding to state and local governments would be reduced by more than $100 million, the real hit would be in private sector jobs and the tax revenue they generate.

The memo prepared by state budget officials notes that the figure is “relatively modest” compared to the $9.3 billion in federal funding contained in the state’s current fiscal year budget.

The memo goes on to warn, however, that Maryland’s economy is “especially vulnerable to the retrenchment of federal spending” because 5.6 percent of Maryland jobs are federal, compared to an average of 2.2 percent nationally. Many additional Maryland jobs in the defense and other industries exist because of the federal presence in the region.

The state’s Board of Revenue Estimates has projected that the federal sequestration could reduce Maryland’s wage and salary base by $2.5 billion and its employment by 12,600 jobs. That would translate into a loss in tax revenue to the state of about $200 million, the O’Malley administration memo says.

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