It wll hit the Navajo Nation the hardest.
If the fiscal cliff's budget cuts are enacted Jan. 1, the Navajo Nation could face anywhere from $33 million to $75 million in cuts from the federal government, said Erny Zah, communication director for the Navajo Nation Office of the President.
The tribal government's fiscal year 2012 budget was about $456.8 million.
Sixty-two percent of that budget came from federal funds, Zah said.
"We're definitely concerned," he said. "It's a difficult time for the Navajo Nation. These cuts basically translate into jobs."
The fiscal cliff is less likely to have as much impact on the day-to-day operations of the city of Farmington.
The city's financial ups and downs are more closely tied to its sales tax revenue than to federal funding, said City Manager Rob Mayes.
In 2008, the city experienced its highest sales tax revenue. Since then, there was a 21 percent drop.
There was a second decline in sales tax revenue in recent months, and at the end of October 2012, the city's sales tax revenue was still 11.6 percent below its 2008 high.
"That was our cliff," Mayes said.
The city responded to the recession by building its cash reserves.
"In spite of revenue declines, we have more money in the general fund than at any other time in the city's history," he
In spite of these efforts, Farmington still faces numerous challenges in the months ahead regardless if the nation slides off the fiscal cliff.
Further drops in sales tax revenue will put additional strain on the city's general fund.
The city is operating at 3.5 percent below budget in revenue, Mayes said.
Mayes will begin planning for fiscal year 2014 in January 2013.
"We'll be deep in the process in about a month, and the crystal ball is foggy," he said. "We are at a point now where there are very little reductions that won't affect services levels. That's what the budget process will be about. We need to have a balanced budget."
Regardless of the fiscal cliff, Mayes calculates that he will have to cut anywhere from $2 million to 2.5 million from the city's budget.
"We live on consumer confidence," Mayes said.
In fiscal year 2012, San Juan County received about $2.1 million in payments in lieu of taxes and New Mexico received about $34.8 million.
Payments in lieu of taxes are federal payments to local governments to help offset losses in property taxes because of nontaxable federal lands within county boundaries.
If an agreement is not reached and so-called sequestration measures are put into place, those payments would be cut by about 7 percent, said Sen. Tom Udall, D-New Mexico.
Sequestration would also result in a $2,200 tax hike for the average family.
The education sector would also feel the burden through reductions to financial aid for college students and cuts to teachers and aides, Udall said.
Although progress is slow, a solution to the Congressional gridlock may be reached before the Christmas holiday.
"I think negotiations are going well," Udall said. "The first thing we need to understand is that we can't do this without a balanced package. In my discussions with republicans, they do want to put some revenue on the table. We're trying to seek common ground."
District 3 Representative Ben R. Lujan encourages residents to speak out to their representatives.
"We want to encourage them to weigh in to their elected representatives, whether they are republican or democrat," he said. "Write to your members of Congress. Stay vocal."
Meanwhile, the political climate on Capitol Hill is slowly softening.
"People are starting to accept that both sides are going to have to give," said current Democratic U.S. Rep. Martin Heinrich. "I think that's a very good signal."
Heinrich, a senator elect, said the federal has establish economic certainty before the Christmas holiday so people will remain confident in the economy.
That could help lead to an accelerated economic recovery, he said.
"We're going to feel the impact for a while, but by working together, we can get through," Heinrich said.