With the sequester taking effect March 1, 2013, the automatic across-the-board budget cuts will impact Federal funding provided to States as well as funding passed through to the local cities, counties and other governmental entities.  Some local entities will be impacted directly to the extent they receive Federal funding direct from Federal agencies.

In total, the sequestration of March 1 combined with the sequestration of March 27 (if this also goes into effect) will mean a nearly $6 billion decrease in funding to all states, with a loss of $790 million in funding in VA, NC, SC, GA and FL alone during 2013. 

Local government entities should think about reviewing the funding they have budgeted from federal funds and start to plan cut-backs to these programs or determine if funding can be provided from other sources.

The National Conference of State Legislatures (NCSL) released their official statement regarding the sequestration on Feb. 26, 2013 stating:

“Setting aside the various political perspectives regarding the size and scope of the reductions, states remain frustrated by the continuing uncertainty from Washington: this sequester, the second sequester coming March 27, the FY 2013 continuing resolution and the 2014 federal budget. The bulk of states end their legislative sessions in the spring, and will face the near-impossible challenge of balancing their budgets without knowing how much federal funding to expect. Federal money makes up 34 percent of total state spending. Knowing if the federal share will drop and by how much is essential for states as they work to balance their budgets.
 
The National Conference of State Legislatures (NCSL) recognizes the need for the federal government to reduce its annual deficits and manage its long-term debt. Realistically, states expect some reductions. But flexibility is critical. If the federal government reduces funds for state-administered programs, yet keeps in place strict standards and requirements, states would be forced  to make up for the money gap by reducing other programs, raising revenue, or some combination of the two. Reducing federal funds without greater flexibility has the effect of shifting the deficit onto the states and is unacceptable.”

For a table of estimated federal funding losses resulting from two FY 2013 Sequesters by state, click here.

For more information please contact Mary Peasley at mpeasley@cbh.com.