Prince William Could Lose Millions if Sequestration Hits, Official Says

Prince William stands to lose millions of dollars in federal funding if sequestration proceeds as scheduled—and even if the United States doesn't fall off the "fiscal cliff," the county could still face challenges in the upcoming year, a county official said. 

The federal government is scheduled to cut $1.2 trillion in spending over a 10-year period beginning Jan. 1; half from the domestic budget and half from the defense budget. One hundred forty-nine programs, such as Social Security, are exempt from cuts. While Congress and the White House continue to bat competing proposals to resolve the issue back and forth, sequestration remains the law of the land. 

The federal government is poised to cut 8.2 percent ($38 billion) in the fiscal year 2013 domestic discretionary budget. Local officials across the country are continuing to prepare for the loss of funding, and Prince William County is no exception. 

The county stands to potentially lose millions of dollars in federal funding, Christopher Martino, the deputy county executive, told members of the Board of County Supervisors on Nov. 27. Martino's presentation detailed the areas where Prince William may experience cuts in fiscal year 2013. 

The county's Office of Housing and Community Development would probably experience large cuts. For instance, the Housing and Urban Development section 8 housing aid to the county totals $27.2 million a year. The cuts could translate to over $2.23 million in lost funding for the county. 

"What this translates into is as many as 160 families could lose their rent subsidy," Martino said. 

Prince William receives $573,000 for the home investment program, which helps first-time homeowners with downpayment assistance and counseling. That program would probably see a reduction of $46,986. 

Another program that could experience cuts is the HUD homeless assistance. The county receives $152,000; $12,464 could be cut. 

"This could impact a number of programs depending how it plays out," Martino said. "One being transitional housing...another could be the homeless shelter itself...or it could impact donations that we make with partners."

The county could also lose $97,334 in its HUD Community Development Block Grant. This money aids disabled people with housing that helps them rehabilitate and the money is repaid when housing changes hands. The county currently receives $1.887 million. 

Prince William isn't out of hot water even if Republicans and Democrats can come to an agreement.

"If some grand bargain is reached, we will still be impacted," Martino said. "Perhaps not to the extent that the sequester would, but perhaps even more so, because some of the proposals are to reduce spending by even larger percentages."

The county has a policy not to fill in the gaps if federal or state funding for programs disappear, unless the programs are mandatory, county executive Melissa Peacor told the supervisors.

Those figures do not include the indirect impact of lost tax dollars if government employees and contractors—who the local economy heavily relies on—lose their jobs.

"That certainly could have an impact on our underlying economy, and could have some of those folks coming to us for services," Martino said. 

And even if sequestration is resolved, or pushed further down the road, issues remain. The Bush-era tax cuts expire this year. Emergency unemployment benefits end. The payroll tax holiday and alternative minimum tax exemptions end. Congress still must find a way to deal with the nation's long-term debt. And Prince William County's credit rating will suffer if the nation's is downgraded. 

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