James B. Hale/The Daily TimesU.S. Sen. Tom Udall speaks at the Aztec Public Library on Friday afternoon about bringing computer technology to children and
James B. Hale/The Daily Times U.S. Sen. Tom Udall speaks at the Aztec Public Library on Friday afternoon about bringing computer technology to children and families across New Mexico.
FARMINGTON — New Mexicans who make use of federal programs — supplying everything from Bureau of Land Management drilling permits to housing subisides — could feel the impact of "sequestration" if Congress allows the automatic budget cuts to go into effect on Friday.

Sequestration, a process approved by Congress and President Barack Obama, was designed to be unpalatable to both Democrats and Republicans in hopes it would force lawmakers to agree on a deficit reduction plan. So far, Congress has failed to agree on a plan to avoid the across the board cuts that will hit both the military and myriad federally funded social programs. The first cuts amount to about $85 billion.

"We're going to be working very hard to try and avert this, even if we pass the deadline," U.S. Sen. Tom Udall, D-N.M., said Wednesday in a telephone interview. "These are across the board cuts, which are very arbitrary."

Those cuts would directly affect education programs, defense department employees, law enforcement departments, food safety workers, air traffic sector employees and other federal employees across the state, he said. Udall said the cuts would impact "hard working, middle-class families."

"This isn't going to hit all at once," he said. "It's not like we're turning off the switch — that's why we need to keep working."


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However, the prospects for a deficit-reduction compromise did not look good Wednesday. Republicans were rejecting tax increases while Democrats were looking for ways to protect the nation's poorest residents.

Pat Cordell, San Juan County Republican Party chairman, sees sequestration's automatic cuts in a different light.

"It seems to me that the (dire effects) have been really hyped," Cordell said. "There is leeway in terms of how it's going to be carried out."

Jon Austria/The Daily TimesEmerson Sandoval, a seasonal emplyee at Aztec Ruins, walks through the ruins on Wednesday.
Jon Austria/The Daily Times Emerson Sandoval, a seasonal emplyee at Aztec Ruins, walks through the ruins on Wednesday.

For Cordell, spending cuts could be a positive development.

"It's such a small amount of our actual expenditures," he said. "It's a reduction of the increase in spending rather than a reduction in spending. It seems like (Obama) wants to talk about taxation without talking about spending cuts. It comes down to -- do we have a spending problem, or do we have a tax problem?"

Sequestration's automatic cuts could have been avoided altogether, said U.S. Rep. Steve Pearce R-N.M.

"I thought it was a horrible idea, the way it was directed to defense spending," Pearce said. "It's a political football. You just don't play games with (the military). I voted against it."

The country's budget and deficit issues should be very clear, he said.

"We owe $16 trillion on the books, and as much as $200 trillion when you include Medicare and Medicaid ... we have a spending problem," he said. "The fault lies everywhere."

A plan proposed by House Republicans to give the White House flexibility in where to impose cuts did not meet with Democratic approval.

Flexibility is a bit of a misnomer, said U.S. Sen. Martin Heinrich, D-N.M.

"It's like saying you've got to chop off two fingers, you just get to choose which fingers to chop," he said.

A solution involving cuts combined with some tax increases would provide a balanced approach and soften the blow for everyday citizens, Heinrich said.

"If you meet in the middle, it's easier," he said. "These cuts will impact services to the middle class. The people who are doing very well in this economy should shoulder some of that burden."

It appears sequestration could slow an already sluggish economic recovery.

According to Federal Reserve Chairman Ben Bernanke's testimony to the House Banking Committee on Tuesday, the Congressional Budget Office estimates that the automatic cuts could reduce real Gross Domestic Product growth across the country by 1 percent to 1.5 percent in 2013.

Bernanke suggested an approach that reduces the deficit more gradually in the short term and more substantially in the long run, rather than the, "sharp, frontloaded spending cuts required by the sequestration."

The looming cuts may already be affecting the economy, according to one expert.

"In a sense, it's already doing some of that," said Dr. Lee Reynis, director of the University of New Mexico Bureau of Business and Economic Research. "We've already seen actions by various federal agencies" in anticipation of the cuts.

New Mexico is relatively unique compared to other states, she said, because it has a large number of federal employees and it receives a significant amount of federal money.

According to data from 2010, the there was $13,578 of federal spending per capita, she said. The agency that complied the report, however, no longer does so, and 2010 was the last year for the report.

Although San Juan County's economy is not directly tied to national laboratories, military bases or the high-tech industry, automatic cuts could have a devastating effect on the regional economy, she said.

"If the (Federal Reserve) winds down its spending, you'll see businesses cut back," Reynis said. "If they do that, you're going to have these ripples throughout the economy."

For Farmington city officials, the federal spending cuts could hit close to home.

The city received $284,000 in grants for the Metropolitan Planning Organization, $450,000 in Community Development Block Grant funds, $586,000 for Red Apple Transit and $1.3 million for airport improvements in fiscal year 2013, which ends in July, according to data provided by Andy Mason, the city's Administrative Services Director.

"Those are all within the discretionary, non-defense cut options," Heinrich said. "They're at risk if we don't do something."

If Congress allows sequestration to begin, it will take time to determine the specific impacts. Below is a partial list of areas that could face cuts in federal funding and what it might mean to area residents.

 

County Government

San Juan County's poorest families may be the most vulnerable if the automatic cuts go into effect, officials said.

The San Juan County Housing Authority subsidizes living expenses for 250 families and another 400 families are on a waiting list for assistance, said Faye Anderson, housing authority director.

The housing authority is funded entirely with U.S. Housing and Urban Development funds, which are at risk of being decreased if Congress fails to reach an agreement on spending cuts.

"I'm afraid that it would affect families who are receiving assistance but I don't know to what extent," Anderson said. "I don't know if families know how devastating this could be for them if we have to take drastic measures."

Anderson said it's unknown how the housing program would be altered if there is a cut in funding. The effect could be fewer subsidies or a decrease in the amount of assistance the families enrolled in the program receive.

She encouraged people who are receiving assistance to start trying to find alternative sources of income in case there is a major change to the program.

"I think this is going to be a big eye opener for a families," she said.

While families enrolled in the housing program may have the most drastic change if there is a spending cut, all county residents will be affected in some way, said County Executive Officer Kim Carpenter.

New Mexico received the third-most money of all states in the country in 2012 as part of the nationwide, payment in lieu of taxes, of PILT program. PILT payments are based on the amount of federal land within a state or county and the area's population and are meant to make up for the loss of property tax.

San Juan County received $2.1 million in PILT payments in 2012, which was more than 28 states in the country.

Carpenter said he has been told that if the spending cuts go into effect, the county's PILT payment will decrease by at least 6 percent, or $126,000.

PILT money goes directly into the county's general fund, so the decrease will result in a cut in services, he said.

In addition to the automatic decrease in annual payments from the federal government, the spending cuts will also result in fewer Community Development Block Grants and other federal funds the county receives.

—Ryan Boetel


National Parks

The U.S. National Park Service operates Aztec National Ruins Monument and Chaco Culture National Historic Park. Both parks could suffer if the parks budget is cut because of the automatic cuts.

Aztec Ruins Park Ranger Lauren Blacik said if there are forced cuts, it not clear how the parks would respond. But the situation could be "dire" and everything from reducing hours and/or staff, or having employee furloughs would be on the table.

"We will do our best to maintain current high standards but it is impossible to face this kind of cut and not see an impact on our visitor experience," Superintendent Larry Turk said in a prepared statement.

Emerson Sandoval, an Aztec Ruins seasonal worker for the last five years, said park staff were alerted to the sequester impact a week ago by email.

"We are all just hoping that Congress will release the funding so we can continue to do our work here," Sandoval said.

There are more than 31,000 acres of National Park Service land within San Juan County.

—Ryan Boetel and James Fenton


U.S. Bureau of Land Management

The federal cuts would fall hard on Farmington's Bureau of Land Management office, which has 125 full-time employees.

Dave Evans, district manager, said "furloughs are very possible" for all BLM employees except three law enforcement officers.

The agency's two investigators and one special agent are exempt from the cuts, Evans said.

Each employee could be required to take up to 22 unpaid days off. Any furloughs would be staggered, so the BLM office at 6251 College Blvd. would remain open.

"We want to still keep the doors open and provide those essential services," Evans said.

The furloughs could delay permit processing for applications to drill, Evans said.

The BLM office oversees much of the natural-gas drilling in the San Juan Basin.

"Will things be delayed? They very well could be," Evans said. "We hope Congress is able to work through this impasse, and this won't occur."

Already, the Farmington field office has instituted a hiring freeze for all vacancies. The agency is also delaying hiring seasonal workers and summer interns.

—Chuck Slothower


Law Enforcement

Local law enforcement agencies commonly apply for federally funded grants to buy equipment or boost special enforcement programs - such as DWI checkpoints.

Farmington police Capt. Keith McPheeters said there are also two Farmington officers whose salaries are paid for with a four-year federal grant.

The grant funding their positions is administered by the U.S. Department of Justice. Farmington received an email from the grant director last week that said sequestration will cut Justice Department funding by 6 percent, which will have "serious consequences for the administration of justice for our communities."

While the existing contracts between local law enforcement and the federal government will not be affected by the automatic cuts, McPheeters said it is possible there will be less money available for future grants.

Another potential issue that may arise from the cuts would be a reduction in federal law enforcement throughout the county.

"Chief Westall is adamant in his support of federal agencies" in San Juan County, McPheeters said. "This has the potential to impact their budgets and staff levels."

—Ryan Boetel


Health Care

Locally, hospital officials and private physicians are waiting to see what happens, and many say it is too early to speculate on what the ramifications of such cuts will be.

"Early indications are (there will be) a reduction in payments for the Medicare services we provide to the elderly," said San Juan Regional Medical Center's Chief Strategy Officer Mike Philips in a written statement. "(San Juan Regional Medical Center) continues to focus on expense control and reduction as one method to cope with the changes in healthcare, (and is) also looking for ways to partner with the physicians in the community in order to reduce the demand for services."

Private physicians and patients might not immediately feel an impact, says Chief Executive Officer for the San Juan Independent Practice Association, Casey Crotty.

"In terms of impact, I don't think there is going to be any locally," said Crotty. "Cuts will affect everyone's reimbursements, but I think in the grand scheme of things, there won't be a large effect. I haven't heard of anyone saying they would limit their medicare slots" as a result of sequester cuts.

—Leigh Irvin