Dennis Domrzalski

New Mexico Business Weekly

New Mexico could lose up to 8,216 jobs and $150 million a year in defense contracts if federal budget cuts scheduled for January take effect, according to a new study.

Those job losses would include 3,600 active-duty military and civilian defense department personnel, and 4,600 private sector employees, according to the Washington, DC.,-based Center for Security Policy.

The job-loss calculations were based on President Barack Obama’s efforts to cut the defense budget by $487 billion, a 9 percent reduction, between 2013 and 2021, and 18 percent reductions the group said are possible as a result of the sequestration cuts scheduled to begin in January.

Sequestration would slash an additional $500 billion from the defense budget between 2013 and 2021, the Center said.

In 2011, the U.S. Department of Defense   awarded $836 million in contracts to New Mexico businesses, the report said.

Lee Reynis, director of the University of New Mexico’s  Bureau of Business and Economic Research, has estimated that New Mexico could lose a minimum of 20,000 jobs if the budget cuts take effect. Some economic development experts have said that those job losses could reach 50,000.

New Mexico lost more than 53,000 jobs during the recession. A recent report by the Federal Reserve Bank of Dallas    said the state has regained 11 percent of those lost jobs.

The new study looked only at Defense Department spending. It did not examine how across-the-board sequestration cuts to other federal agencies would affect the states.

In FY10, for instance, the federal government spent $28 billion in New Mexico, placing the state sixth in terms of per capita federal spending. Of that $28 billion, $7.5 billion was spent on procurement. The U.S. Department of Energy    accounted for $4.8 billion of that procurement spending.

New Mexico business leaders have suggested that those procurement dollars will be easy targets for federal budget cutters because they represent discretionary spending.

To read the full report, click here.

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