DC region faces unique challenges from budget cuts
ARLINGTON, Va. (AP) — To get a sense of just how much federal government spending influences the Washington metropolitan area, all you have to do is listen to the ads on an all-news radio station there.
Instead of promoting happy hours and nightclubs, WTOP's commercials are replete with buzzwords about cloud computing and fulfilling mission statements — pitches by IT consultants and contractors trying to land business with federal agencies.
And the storm that hit the Mid-Atlantic region on Tuesday? It's been dubbed "snowquester," a play on the D.C. wonk jargon that is used to describe the $85 billion that must be cut from federal budgets over the next six months after President Barack Obama and lawmakers failed to reach a deal that would reduce the national deficit.
Communities on the Capital Beltway have disproportionately benefited from the federal government's growth for decades — and there is no doubt they will now take a disproportionate hit from the budget cuts.
The federal government is the region's largest single employer and an economic engine. Thousands of federal government workers for agencies as varied as the CIA and the Patent and Trademark Office make their home in the area — about 15 percent of the total federal workforce, according to data from the Bureau of Labor Statistics and Office of Personnel Management.
So do those who labor for the scores of private contractors in the region that live and die off federal dollars.
The exact effect of the automatic budget cuts is, of course, difficult to predict with any precision. Federal agencies are still trying to figure out exactly how they will tighten their belts — and nobody knows if the cuts will remain in place for an extended period of time.
The Republican-controlled House approved legislation Wednesday to prevent a government shutdown on March 27 and blunt the impact of newly imposed spending cuts on the Defense Department. The measure heads to the Senate, where Democrats hope to give a variety of other federal agencies flexibility in implementing their share of the $85 billion in spending cuts required to take effect by the end of the budget year.
Still, hundreds of thousands of federal workers in the region are bracing themselves for unpaid furloughs.
Eugene Russell, a fire inspector and firefighter at the U.S. Naval Academy in Annapolis, is considered a Defense Department civilian. He said he is still waiting to find out whether firefighters will be furloughed — which he estimates would cost him $1,200 a month — or will in some way be made exempt from furloughs because of the public-safety requirements that demand a minimum level of staffing.
Russell said he knows some colleagues who are already cutting back, canceling cable TV and the like. In his own case, Russell said he may be forced to stagger payments for some family medical bills to hold the family budget together.
"Federal employees realize that the government's financial situation is in the sewer and there needs to be a fix," he said. "But they don't believe we should bear the load any more than any other citizen."
Half of the budget cuts are directed at the military, which has a commanding presence in the region. In addition to the Washington Navy Yard, the Pentagon is headquartered in Arlington, Va.; Fort Belvoir in Fairfax County; Fort Myer in Arlington County; and Quantico Marine Corps Base in Prince William County, among others.
And yet, the greatest pain from the cuts is likely to be felt not by the civilian military workforce, but employees for the numerous private systems-management and IT-consultant contractors that have popped up around the Pentagon during a decade of military buildup and security spending following the Sept. 11 terrorist attacks.
Even before the cuts went into effect, uncertainty about future funding prompted the government to scale back from $50 million to $5 million a contract it had awarded to Springfield, Va.-based Strategy and Management Services Inc., said company founder and CEO Staci Redmon.
Redmon's workforce has grown over the past five years to 120 employees and she is hopeful federal budget cuts won't reverse the trend.
"It's personal to me," she said. "I have employees who have families to feed."
One of the best ways to measure just how big a hit the region will take might be to head to the Metro, the nation's second-largest subway system.
If you can grab a parking spot at 8:30 a.m. at the East Falls Church Metro station in northern Virginia, or wedge yourself onto a train at Metro Center downtown during the afternoon rush without sucking in your gut, you'll know economic activity is slowing down a bit.
During rush hour, about 40 percent of the system's riders are federal workers, said spokesman Dan Stessel, who, in a recent meeting with Metro board members, estimated that a 1 percent drop in ridership would translate into $7.8 million in lost revenue.
The Metro could lose out on $10 million in fare revenue if the federal-worker furloughs take effect, he said.
The subway also is facing the loss of a separate $12 million federal subsidy.
Much harder to gauge are the trickle-down effects of the budget cuts on the small businesses that serve the federal workers.
At Uptown Cleaners, just a short walk from the Pentagon and all the military contractors that surround it, Marine uniforms are among the garments hanging from a rack. But employee Kris Yoon was unconcerned as she took a brief break from hemming a pair of slacks.
The government has gone through repeated budget scares during the four years Uptown Cleaners has been in business there, she noted, but people still need clean clothes.
"We're always steady here," she said.
Down the street at Epic Smokehouse, bartender David Holmgren said he didn't know what to expect. The bulk of the lunch rush is made up of government workers from the Transportation Security Administration and Pentagon — but at dinner time, "it's really people in the neighborhood, and it's a wealthy neighborhood, so I don't see them being impacted too much," Holmgren said.
There is something else to consider: Despite the looming government presence in the region, metropolitan Washington is really no longer the monolithic, company town that it used to be.
Jerry Gordon, chairman of the Economic Development Authority for Northern Virginia's Fairfax County, said officials there have made a concerted effort over the past decade to diversify the county's economy so it does not rely so heavily on the U.S. government.
Fairfax County is now home to corporate headquarters in the automotive industry (Volkswagen AG's North American headquarters), hotels (Hilton Worldwide) and media (Gannett Co., parent of USA Today), among others.
"The toeholds in those industries levels out the draconian effects in the federal cuts," Gordon said.