Report: 20,000 jobs near Va. bases at risk from budget mess
The (Newport News, Va.) Daily Press
The federal budget crisis would cost Hampton Roads around 20,000 jobs over a year and trigger one of the worst economic downturns since World War II, according to a report issued Friday.
The Hampton Roads Planning District Commission looked at how the fallout from spending cuts would hit defense and non-defense sectors of the region's economy.
Defense Department cuts would cost the region 11,750 jobs in 2013, said economist James Clary, who did the study. That number could rise as delayed military repair and construction projects are canceled outright. This drop alone would reduce regional personal income by around $1 billion.
Defense spending accounted for 46 percent of Hampton Roads' economic output in 2012, and that share had been expected to increase this year.
While military cuts are a primary concern, non-defense cuts in federal spending would cost another 7,200 jobs and almost $921 million in gross regional product, Clary said.
When the fallout is fully computed, it could be around 20,000 jobs and cost more than $1.9 billion in gross regional product over 12 months.
Of particular concern on the non-defense side – and somewhat under-publicized -- is a 2 percent reimbursement cut to Medicare providers, Clary said. It goes into effect April 1 "and will have significant employment impacts both nationally and regionally," the study says.
Hospitals have reduced training budgets and capital expenses, so administrators will be forced to look at a staff reduction, Clary said.
A related concern, but more difficult to measure, is a $1.5-billion cut to the National Institute of Health, which affects scientific research and new grants for research and development. Current grant holders have been notified that grants might not be renewed, and the project scope restricted -- or even canceled if work has not begun.
"It is difficult to model the impacts of possible changes to grants on local research institutions, but this presents a significant concern as sequester continues to be national policy," the study says.
Finally, the Department of Education has indicated it will cut all programs by 5 percent, which would subtract $1.25 million annually from Hampton Roads school districts. The study notes that York County alone receives contributions from the Payments for Federal Property Program.
According to its website, the program assists local school districts that have lost a portion of the local tax base due to federally-owned property. To be eligible, a school district must demonstrate that the federal government has acquired, since 1938, real property with an assessed value of at least 10 percent of all real property in the district at the time of acquisition.
Help could be on the way to soften the impact of job losses, but the outcome is far from certain.
The House of Representatives this week passed legislation that would keep many cuts in place while protecting shipbuilding budgets. That could stave off potential job losses associated with stalled or canceled projects. That bill now heads to the Senate, where Democrats favor a somewhat different approach. A House-Senate conference committee is expected to resolve the differences.