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February 25, 2013

Local officials uncertain of cuts impact

The Daily Star

---- — Area officials whose organizations might be affected by possible Washington budget cuts said they were largely uncertain about the impact.

Lawmakers have until Friday to avert $85 billion in mandatory across-the-board budget cuts known as sequestration. The cuts are evenly divided between defense and non-defense programs.

This area won’t initially be as affected as others with a higher concentration of government jobs, said Karl Seeley, Hartwick College associate economics professor. Some local defense work might be affected but a lot will depend on how long before the issue is solved, he said.

A lot of the impact will be determined by how the state copes with the cut of federal funds to a variety of programs, Seeley said. The government in Albany will have some discretion in the situation, he said.

If the cuts throw the country into a recession, Seeley said, the impact to the area would be wider, possibly affecting college decisions and tourism.

The New York State Association of Counties said in a recent media release that while the impact on counties cannot be determined, federal estimates assume the statewide impact would be a loss of $700 million in federal aid. Little goes into county budgets, but across-the-board reductions could affect programs that counties administer for the state and state and federal government. Some of these may include public health and environmental grants, clean water and sewer revolving loan funds, transportation aid and homeland security grant funds.

Otsego County Department of Social Services Deputy Commissioner Eve Bouboulis said because the actual impact can’t be determined at this point, “we’re hopeful that a reasonable solution is found.” The heating assistance program and child care funding are two examples of programs that could be impacted. “They are really needed in this county,” she said.

Delaware County Social Services Commissioner William Moon said with a busy agency to run, “I don’t have time to study something that may never affect me.” He would need to know what the federal cuts would be and how that state would deal with them, before he knows what the impact on the county would be.

The one person who talked of specifics was Bassett Healthcare Network President and Chief Executive Officer Dr. William F. Streck. His best estimate is that his organization could lose $3 million annually from the cuts he said in a prepared statement. These would include $1.8 million from Bassett Medical Center in Cooperstown, $700,000 from A.O. Fox Hospital in Oneonta and $500,000 from Cobleskill Regional Hospital. These are on top of federal and state health care cuts, he said. Bassett budgeted for these cuts, so “we are at least prepared,” Steck said.

Bassett spokeswoman Karen Huxtable said, “We are still implementing strategies to deal with the impacts.”

These plans include holding the line on expenses where possible, leveraging the network’s purchasing power to gain purchasing efficiencies and filling vacancies where possible. There have been no layoffs, she said.

Otsego County Economic Development Department Director Carolyn Lewis said federal spending has to be cut but “this is taking the proverbial ax to it. Nobody really knows what to expect. It’s an unfathomable amount of money and its across the board.”

She said she would like to see this approach avoided. Although area businesses are “resilient,” she said, “It’s a fragile ecosystem.”

Big cuts to defense and aerospace might affect local businesses in that supply chain, Lewis said. Raising taxes on small businesses might affect those who have been hanging on in a tough economy.

“The most frightening aspect is that the cuts are so deep and broad and so fast,” she said. Businesses may not be aware of the implications so they are not able to prepare for cuts to federal lending programs, regulatory and export assistance.

Cuts to social programs affect the most vulnerable families and children, she said. She didn’t know the extent of what was planned, but “these families are all part of the economic cycle.”

Sidney Central School Superintendent Bill Christensen said the impact is hard to figure out because possible cuts to programs such as special education and academic intervention go to the state, and “then it trickles down to us. It’s unknown what we will see at the local level.” 

He said he doesn’t think the final results will be as bad as first recommended, but “any cuts will make the funding gap bigger (for future budgets).”

SUNY Delhi Director of Financial Aid Nancy Hughes said, “We don’t have a lot of details or information.”

The Pell Grant, the major federal student aid program, won’t be affected this year but could be in the future if the cuts go through, she said.

Oneonta Mayor Dick Miller said, “We are looking at the situation but haven’t really determined what the outcome will be.”

While he is focused on what is going on in Albany, “I don’t pay very much attention to what goes in Washington,” he said. However, if there are cuts, “There certainly will be a trickle down.”

Opportunities for Otsego Executive Director Dan Maskin said, “I hope it doesn’t happen but in this (political) environment we don’t really know.”

He said he does not know any specifics of what is being considered, so he could not speculate on whether any jobs could be impacted. Most of his agencies federal contracts are funded through the end of March. His “gut reaction” is that Congress may deal with the problem temporarily.

The Otsego County Chamber recognizes that the whole country is going to be affected by any implemented sequestration cuts, Executive Director Barbara Ann Heegan said in a statement: “Our local economy could be influenced by these mandatory cuts with the possibility of reducing public and private sector employment. The uncertainty of where the sequestration may lead the local economy is leaving businesses feeling unsettled.”