Reston Spring

Reston Spring
Reston Spring

Friday, March 1, 2013

Some Local News Articles Look at Potential Effects of Sequestration Here

In the run up to the implementation of sequestration as a result of Congress' failure to pass a rational budget, we have heard both parties' public relations campaigns to bolster their position on the budget.  Now, with sequestration here, we actually have some news reports that look at the potential effects of sequestration here in northern Virginia, an area all agree will be hard hit by the sweeping budget cuts. 

In this first article, "Sequestration is Coming. How Will it Impact Fairfax County?," Fairfax Station Patch report James Cullum takes a look at the impacts on our county budget, the local business environment, and real estate, among other topics. 

Tighter budgets, diminished real estate values and more...

Sequestration threatens to destabilize the Northern Virginia economy, and some say the effects of the across-the-board cuts to federal programs and contracts will be felt across Fairfax County. 
"Businesses are in business because they know how to plan for problems and deal with them. But not knowing what to plan for is devastating to them," said Dr. Gerald Gordon, president and CEO of the Fairfax County Economic Development Authority to Patch. . .
Long asked the County Board of Supervisors in his budget to approve a 2 cent increase in the real estate tax rate, while contending with $20.52 million in agency reductions, including the elimination of 91 merit positions. Additionally, there would be no merit increases for County employees in 2014. 
One result of the economic uncertainty is that prospective commercial tenants have put on the brakes on moving to Fairfax County, said Mount Vernon District Supervisor Gerry Hyland to Patch.
For the rest of this good overview, click on the article's title above.

In this second article, "Gauging The Possible Effects Of Sequestration On Alexandria Workers And City Finances," in the Alexandria News, Bruce Johnson, a senior Alexandria government executive, takes an indepth look at the effects of sequestration there and in the surrounding northern Virginia areas.
 Because we live in a regional economy, the impact of the budget cuts caused by the “sequestration” of funds beginning on March 1, has to be evaluated not only by looking at the effects on Alexandria residents, who largely work outside of the City, but also on those who work in Alexandria, who mostly commute from outside of Alexandria. The Alexandria workforce can be seen from these two angles – those who work in Alexandria and those who live in Alexandria.  No matter which angle is chosen the impact is likely to be significant if sequestration occurs and it is not modified in some significant fashion over the coming months. . .
To understand the impact of sequestration on Alexandrians, one must look at the impact of sequestration on Federal employees and Federal contractors located not only in Alexandria, but also in the surrounding jurisdictions . . . In Fairfax County only 3.3% of employees are Federal workers and Federal wages constitute 4.4% of total wages.
The lower Federal government employee share of the Fairfax County labor market leads to the next important question, how much of the local labor markets are dominated by Federal contractors.   In Fairfax County, a list of the 50 largest employers[3] includes (in addition to 4 Federal government organizations and 2 Federally sponsored government enterprises - Fannie Mae and Freddie Mac), (and) 17 primarily Federal government contractors . . .
The article, available through the link above, goes on to discuss in greater depth the impact on Alexandria's government revenues.

The most systematic published work on the effects of the sequestration appears to have been done by GMU's Center for Regional Analysis.  In a presentation to the Fairfax County Economic Development Authority last October, Dr. Stephen Fuller walked through the effects of sequestration starting at the national level and drilling down to Fairfax County.  Here is the final viewgraph from that presentation showing the prospective impacts on Fairfax County in 2013:


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