Fri February 22, 2013
The Impact Of Federal Cuts In Northern Illinois
The deadline is looming for automatic spending cuts at the federal level. While lawmakers wrangle over ways to avoid the so-called sequester, those who rely on federal funding are wondering how they would be affected. That includes companies, agencies and many others in northern Illinois.
In one week, $85-billion dollars in spending cuts will kick-in, unless Congress intervenes. That has people like Steve Katone worried. Katone is vice president of program management at SupplyCore, a defense contractor based in Rockford.
The company recently instituted a hiring freeze amid the uncertainty surrounding federal spending. Katone says more than 90-percent of their customers are defense related. If they see their funding evaporate, SupplyCore would have to continue to hold the line on adding staff.
“We need people to support our customers. But if our customers aren’t buying stuff, we can’t hire more people” Katone said.
While SupplyCore has been bracing for the worst, Katone says they could also benefit from the situation as it relates to military bases.
“If the bases start cutting personnel, that could have a positive impact for us because that is work they cannot do that they would outsource to someone like us. That would make our contracts actually more valuable because we would perform the work they can’t do” Katone said.
On the flip side, Katone says if spending on base maintenance is cut, SupplyCore would stand to see a hit to their bottom line, because that’s the type of work the company specializes in.
Non-profit organizations have also been preparing for deep budget cuts in Washington. Mike O’Connor is executive director of Prairie State Legal Services, which provides legal aid to low-income residents in northern Illinois.
Like SupplyCore, he says Prairie State made adjustments ahead of the deadline. O’Connor says he wanted to make sure they weren’t caught off guard when crafting this year’s budget.
“I took my best guess and I made the assumption that federal funding would by ten percent in 2013” O’Connor said.
O’Connor was close to that estimate.
“The news that we have right now is that if the sequestration in fact occurs, we’re told to expect in the area of about seven-point-four something percent” O’Connor said.
O’Connor says the anticipated reduction limits his organization when it to comes to maintaining a staff that can provide general legal assistance. He says other funding sources can bring in more staff members to do specialized work. But because federal funding accounts for 40-percent of their operating budget, a sizable hit makes it difficult to carry out the organization’s core mission.
The uncertainty surrounding federal grants is something the research community is keeping an eye on. Lisa Freeman is with the research division at Northern Illinois University. She says the section of their portfolio at severe risk is fundamental science.
“A lot of the fundamental work that we’re doing related to energy and environment would be impacted” Freeman said.
Freeman says if the sequestration were to carry on for quite some time, they would have problems with faculty being able to complete their work.
Freeman says they understand difficult decisions are needed to address the nation’s debt. But she says they urge lawmakers to consider the long-term impact of allowing deep and immediate budget pain to go through.
“At the time that we’re contemplating making large cuts, competitor nations are making large investments and we would be disadvantaged globally if we didn’t understand that scientific research drives innovation, productivity, job creation and growth” Freeman said.
On a broader scale, communities across northern Illinois could feel the impact through unemployment benefits. The White House Budget Office says sequestration would result in reduced jobless benefits for nearly 4 million people who’ve been out of work for six months or longer.
For communities like Rockford, which is still dealing with double-digit unemployment, that could be difficult to swallow.
*Susan Stephens contributed to this report