Brevard could feel bigger sting from budget cuts than other communities

by: Wayne T. Price and Patrick Peterson

Florida Today

A key economic engine of Brevard County, the area’s defense, aerospace and engineering sectors, could get walloped by across the board cuts in federal government spending mandated by law if Congress can’t reach a budget deal by a Friday deadline.

Start with Harris Corp. or Northrop Grumman Corp., two of Brevard’s largest employers, whose health depends heavily on government contracts. But the impact won’t stop there, spreading to dozens of smaller contractors and suppliers across the Space Coast who work on military, space and other projects.

To be sure, the listed cuts being talked about by the White House and Congressional leaders in Washington also will take a bit out of programs that serve people across the county and Florida, from meals for seniors to education for needy kids.

But the biggest bite appears to be a threat to jobs, or even just lingering uncertainty, for Brevard’s many government contractors. One estimate from the Center for Security Policy in Washington, D.C., has it that Brevard has 1,600 companies that could see a negative impact from “sequestration,” which could cost Florida more than $250 million in the first year.

“Brevard has a very large defense and industrial base,” said Paul Hirsch, president of Madison Government Affairs, a Washington, D.C., government-relations firm that advises Brevard economic development officials on military affairs.

“Whether it’s large or small businesses, they’re going to experience a significant slowdown,” Hirsch said. “So when the big firms like Harris, Lockheed, Boeing and DRS will experience slowdowns, it cascades downhill. The people that work at these companies will experience some sort of a reduction in employment.”

The mandatory federal budget cuts — called sequestration in Washington parlance — has been Topic No. 1 among Washington lawmakers for weeks as well as companies and employees across the country who’ll be impacted by how it all plays out. Republicans and Democrats both blame the other side for the projected $85 billion in spending cuts the process will demand over the next seven months.

The sequester was a creation of the 2011 debate to raise the federal debt ceiling. It was designed as a political prod for Republicans and Democrats to reach an agreement to reduce future deficits. Since the sequester called for deep cuts to both military programs generally supported by Republicans and social programs favored by Democrats, the thought was that the two parties would reach a budget agreement that would avoid triggering the sequester. But the two parties failed to reach such an agreement as of Tuesday.

While that is a relatively small percentage of the overall federal budget, many programs such as Social Security and Medicare and active-duty military pay are exempt from the cuts, meaning some agencies and programs will face outsized cuts for the remainder of the budget year, which ends Sept. 30.

The White House started the week by releasing a state-by-state list of what it called the “devastating impact the sequester will have on jobs and middle class families across the country if Congressional Republicans fail to compromise to avert the sequester by March 1st.”

No one yet knows exactly how much of that $85 billion would specifically impact Brevard, but few are predicting that it will be good. The kinds of cuts being talked about hit areas of the economy that Brevard is heavily reliant upon: military, space, aviation and health care, among others.

“It’s going to hit us, so we’re concerned about it,” Lynda Weatherman, president of the Economic Development Commission of Florida’s Space Coast, said about the last threat of mandatory cuts. That threat was temporarily delayed, an option under consideration again this week as the new deadline nears.

“I think the most frustrating thing to everybody whether it’s people inside the Beltway or outside is that we have 535 duly elected members of Congress who are there to make sure government works and runs and makes sure people’s security is taken care of,” Hirsch said. “Sequestration does nothing more than make us more insecure.”

The EDC’s Weatherman said that her organization was on top of the possibility of sequestration for more than a year. Representatives of the EDC as well as some of Brevard’s largest government contractors met last March in Washington with lawmakers.

The EDC, she said, was searching for solutions to avert across-the-board cuts, but also wanted to let elected officials know about the opportunities to put more work on the Space Coast if one method of belt-tightening was to consolidate operations for government agencies and their contractors.

She likens the ongoing process to the recent military base realignment process. In that instance, the economic development commission started a successful campaign early on to make sure Patrick Air Force Base and Cape Canaveral Air Force Station stayed off the chopping block by demonstrating both the facilities’ importance as they were and their ability to take on more work if needed.

“We have not heard anything directly about companies consolidating here,” Weatherman said, “but this is the argument we’re making.”

This article can be read here: http://www.floridatoday.com/article/20130226/NEWS01/302270020/Brevard-could-feel-bigger-sting-from-budget-cuts-than-other-communities