Impact of Sequestration on Fairfax County


The Budget Control Act of 2011 established mandatory spending reductions by putting formal caps on non-entitlement discretionary spending that will reduce funding by $1trillion from 2012 to 2021, relative to CBO’s baseline from 2010. The law also established a Joint Select Committee on Deficit Reduction (the “Supercommittee”) to produce bipartisan legislation by November 2011 to reduce projected deficits by at least an additional $1.2 trillion through 2021. The group failed to reach a deal, triggering across the-board budget cuts, also known as sequestration. Sequestration is an automatic reduction to federal government spending for a given fiscal year. Beginning this year, the sequester is scheduled to reduce federal expenditures for nine consecutive fiscal years such that the cuts, including associated debt service savings, total $1.2 trillion.

For years Fairfax County has benefited from its proximity to the federal government. However, the prolonged uncertainty over sequestration has been a weight on business investment, hiring, income growth and overall economic activity this past year and will likely continue to impact the County’s economy in the coming months. The economic impact of thousands of residents both earning and spending less due to the sequester-related furloughs will have ripple effects on the County’s revenues as these residents pare expenses, put off car purchases and delay buying a home. Additionally, reduced funding to federal programs operated locally will certainly have an impact on the ability to maintain service levels.

Reports

Sequestration Links


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