Forced budget cuts will pinch Minnesotans

6:10 PM, Feb 28, 2013   |    comments
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WASHINGTON -- At a time when polls show jobs and employment to be the top concern for many Americans, automatic federal budget cuts that would take effect after midnight Friday could have a deep impact on workforce development in Minnesota.

The Gopher State would lose $5.6 million for job training programs under the forced cuts known as sequestration, according to the National Skills Coalition, a group of employers, unions, public officials and workforce development advocates. The drop in funding translates into 18,000 fewer people being served.

If continued through 2021 as called for in the Budget Control Act of 2011, the cuts to education and training programs in Minnesota will amount to $76.5 million, with 252,000 fewer people being served.

"We're pretty concerned. We're in a very tight environment already," said Andrea Ferstan, director of income strategies at Greater Twin Cities United Way. She said Minnesota employers have complained about a skills gap in the state, "so we're already at a critical point."

Nationally, almost two million fewer workers will have access to skills development programs this year as a result of $450 million in sequestration cuts.

"These across-the-board cuts will mean millions of workers and employers won't be able to get the skills needed to close the skills gap, reduce unemployment and create more jobs," said Rachel Gragg, the National Skills Coalition federal policy director. "Jobs and employment are the American public's number one concern, yet Congress continues to ignore their constituents' priorities, cutting workforce training programs by more than $1 billion since 2010."

Employment training is one of many areas in which Minnesotans could feel the pinch of sequestration that will affect everything from air traffic control to work study programs.

The forced cuts are the result of the inability of Congress and the White House to reach accord on a plan to lower the nation's more than $16 trillion debt. That was a condition of the 2011 deal to increase the nation's debt limit. The cuts are projected to total $1.2 trillion through fiscal 2021.

This year, $85 billion will be cut between March 1 and Sept. 30, the end of the fiscal year, resulting in the loss of 750,000 jobs, according to the Congressional Budget Office. They were originally supposed to take effect Jan. 1, but Congress approved a two-month delay.

Half the cuts will come from defense programs and half from non-defense programs. Social Security and Medicaid are exempt from the reductions, but Medicare payments to doctors and hospitals will be cut up to 2 percent.

The cuts were designed to be so severe that Congress and the White House would feel compelled to avoid them by coming up with a less drastic debt-reduction plan, but that hasn't happened.

Instead of sitting down to negotiate, Republican leaders in the GOP-controlled House and the White House have engaged in hyperbole and fingerpointing over the impact sequestration will have and who is to blame.

President Barack Obama and congressional leaders are scheduled to meet Friday. On Thursday, competing Democratic and Republican bills to replace the sequester failed in the Senate. Barring an agreement, Obama is expected to sign an executive order just before midnight Friday, directing federal agencies to begin the budget cuts.

"Democrats and Republicans need to come together and focus on smart solutions to reducing our debt that will help move our economy forward," said Sen. Amy Klobuchar, D-Minneapolis. "I'll continue to push for a balanced approach to putting our country on a fiscally responsible path that gives Minnesota businesses and families the certainty they need."

The impact of sequestration in Minnesota will be less than in most states, as federal spending amounts to just 1.8 percent of the state's gross domestic product, the second lowest in the country behind Delaware's 1.3 percent, according to an analysis by Wells Fargo Securities.

On Sunday, the White House released fact sheets on what that would mean for each state. Here is a sampling of the impact in Minnesota:

-- Clean air and water: The state would lost about $3 million in funding for clean air and water programs, as well as $1.6 million in grants to protect fish and wildlife.

-- Education: Minnesota would lose $7 million in funding for primary and secondary schools, jeopardizing 100 teacher and aide jobs. The state also would lose $9.2 million for 110 teachers, aides and staff who work with children with disabilities.

-- Law enforcement and public safety: The state would lose $201,000 in Justice Assistance Grants that support police activity, crime prevention, drug treatment and other programs.

-- Public health: Minnesota would lose $507,000 to enhance its ability to respond to health threats such as infectious diseases, natural disasters and biological, chemical, nuclear and radiological events. The state also would lose $1.2 million for drug abuse prevention and treatment.

--Vaccines: About 2,360 fewer children in Minnesota would receive immunizations for a host of diseases because of a reduction of $161,000 in funding.

In addition, St. Cloud Regional Airport is one of four Minnesota airports where the air traffic control tower could be shut down because of cuts totaling $600 million, according to the Federal Aviation Administration. And hundreds of federal workers in Minnesota would be furloughed. The millions in lost wages could be felt throughout the state's economy.

Rep. Michele Bachmann, R-Stillwater, said the impact will be worse than it would have been if Congress and the White House had settled on a plan two years ago.

"We needed to fix the budget at that time," said Bachmann, who voted against the debt-ceiling agreement that included the sequestration provision. "All sequestration did was kick the can down the road and make matters worse. Programs are going to be cut that shouldn't be cut."

Bachmann said Democrats and Republicans are to blame for the automatic cuts that economists say will be a drag on the nation's already sluggish economic recovery.

"This was a very bad idea when it was first brought forward," Bachmann said. "It was the president's idea, but it was a bipartisan vote."

The fourth-term congresswoman and 2012 presidential candidate said the government could come up with more than enough to meet the $85 billion spending reduction target for this year just by going through programs and eliminating fraud and waste. She cited a Feb. 7 Government Accountability Office report on federal agencies making $115.3 billion in improper payments in 2011.

"This was the federal government telling on itself," Bachmann said. "This wasn't some watchdog agency. We know there is waste in government."

(Copyright 2013 Gannett Washington Bureau. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

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