Page 2 of 2 Previous

Continued: Minnesota could feel fury of federal budget cuts

  • Article by: KEVIN DIAZ , Star Tribune
  • Last update: February 24, 2013 - 7:30 AM

But the economic drain could still be significant.

A George Mason University study of the sequester and its related budget cuts since 2011 estimates that Minnesota’s economy could shrink by $1.6 billion, resulting in the loss of 16,033 jobs, more than a quarter of them in the defense sector.

Minnesota defense contractors, who earned nearly $2 ­billion in 2011, could face revenue losses of $349 million each year of the sequester, according to an analysis by the Center for Security Policy in Washington.

The larger ripple effect

The impact is already being felt, said Chip Laingen, who heads the Defense Alliance of Minnesota. A defense industry networking event in Minneapolis next month likely won’t see any of the usual Defense Department representatives. Pentagon officials cited the need to cut back on travel, he said.

Meanwhile, a recent Minnesota Management and Budget report estimated a potential $117 million reduction in grants and programs subject to the sequester, though that figure could be slightly diminished by the Jan. 1 fiscal cliff deal that delayed the sequester budget cuts for two months.

Among the major targeted programs in Minnesota this year: $14 million from special education; $12 million from the Title I education program; $10 million from low-income energy assistance grants; and $2.5 million from the Job Corps.

But even if Minnesota has less to worry about than other states, the biggest impact could come from the predicted slowdown in the national economy. “That’s going to ripple into Minnesota’s economy,” said state budget director Margaret Kelly. “That may show up in future revenue forecasts.”

And even if the sky doesn’t fall for everyone, it certainly will for some. “To the individual who loses his or her job,” Kline said, “that sky is falling.”

Kevin Diaz • 202-383-6120

  • by the numbers

    Projected impact of the sequester in Minnesota, through the end of 2013

    Jobs:

    Defense-related job losses – 4,911

    Non-defense job losses – 11,122

    Total estimated job losses – 16,033

    Total lost labor income from job losses – $821 million

    Economy:

    Gross state product (GSP) impact: minus $1.6 billion

    (Minnesota ranks 47th among states in total federal expenditures as a percent of GSP)

    (Source: Stephen S. Fuller, director of Regional Analysis, George Mason University)

    State budget:

    Potential $117 million reduction in programs subject to sequestration

    Overall, Minnesota’s federal funding is expected to decrease by 1 percent compared to 2012

    (Federal funds make up 29 percent of the state’s 2012-13 budget)

    (Source: Minnesota Management and Budget)

    Selected grant impacts:

    Special education –- $14 million

    Title I – $12 million

    Women, Infants and Children (WIC) – $7 million

    Head Start – $6 million

    Vocational Rehabilitation – $2 million

    Community Development Block Grants (CDBG) – $2 million

    (Source: Minnesota Management and Budget)

    Defense Industry:

    Anticipated defense contractor losses – $349 million

    Civilian Defense Department job losses – 688

    (Source: Center for Security Policy)

    Maternal and child health services:

    10,800 mothers and young children lose access to food assistance and health care

    3,700 fewer children receive vaccines

    14,300 fewer women served by maternal and child health care block grants

    (Source: American Academy of Pediatrics)

    Education and Research:

    $54 million cut from NIH research projects in state

    $34 million in total cuts for education programs

    (Source: NEA and Senate Appropriations Committee Democratic staff)

    Job training:

    20,795 fewer people served by federal job services

    281 fewer veterans served by Veterans’ Employment and Training

    (Source: Senate Appropriations Committee Democratic staff)

  • get related content delivered to your inbox

  • manage my email subscriptions

ADVERTISEMENT

Connect with twitterConnect with facebookConnect with Google+Connect with PinterestConnect with PinterestConnect with RssfeedConnect with email newsletters

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

 
Close