Federal Sequestration’s “Severe” Impact on Maryland

A recent article in Gazette.net highlights the impact that federal sequestration cuts would have on Maryland.  The Federal Budget Control Act will go into effect this January if Congress does not act.  According to the Department of Legislative Services, the Act would dramatically reduce federal funding to Maryland.  As reported,

The act requires nearly $1 trillion in cuts over the next several years — a process known as sequestration — and is set to reduce federal funding to the state by more than $117 million in fiscal year 2013, according to the state Department of Legislative Services.  While that’s only a fraction of the state’s budget, the overall cuts could push the U.S. economy back into recession, resulting in a loss of 60,000 Maryland jobs and $635 million in personal income and sales tax revenue, according to DLS.

Maryland’s proximity to the nation’s capital creates a close relationship between the two economies. As described,

[F]ederal employees make up 5.6 percent of Maryland’s workforce, well above the national average of 2.2 percent, making the state particularly vulnerable to changes in federal spending, according to the budget department.

In the Department of Legislative Service’s October 17 briefing of the Spending Affordability Committee, the Department of Legislative Services described how federal sequestration cuts will put a damper on Maryland’s progress towards a balanced budget.  As reported in the Baltimore Sun,

Without the fiscal cliff, that would put Maryland within range of eliminating its structural deficit within a year or two, said chief policy analyst Warren Deschenaux.  “We’re getting so darn close to being balanced that I can almost smell it, and it smells good,” he said.

For more coverage of that briefing, see MACo’s previous post, State Facing $600+ Million Structural Deficit

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