Sequestration Will Likely Reduce Federal Funding Support for Several DC Priorities

February 27th, 2013 | by Jenny Reed

It appears inevitable that on Friday, March 1st, sequestration — or automatic federal budget cuts — will take effect. These immediate budget cuts will reduce federal funding for a vast array of programs, including many that provide grants to DC and other cities and states. The cuts that will affect DC include, among others, education, affordable housing, assistance for homeless residents, HIV/AIDS services, and workforce development. 

Unfortunately, the round of cuts triggered this Friday may not be the last one.  A second, much smaller, sequestration could hit on March 27th if Congress opts to reauthorize the current “continuing resolution” to fund the federal government for the rest of 2013. (As the District Dime noted yesterday, reduced federal spending also will hurt the local economy, which relies heavily on federal employment and contracting, and this slowdown will reduce the city’s expected tax collections.) 

This Friday’s sequestration will result in 5 percent cuts to all non-defense programs, and these cuts will have to be absorbed in the remaining seven months of the fiscal year.  How will this impact DC?  While there is some uncertainty as to how cuts to each program area will be achieved, here are some examples of some likely cuts in the District.

  • Education: Funding to DC for Title I to provide supports for low-income children would be cut by $533,000 and federal IDEA funds for special education services would lose $925,000. 
  • Affordable Housing:  Federal cuts will reduce funding for the DC Housing Authority which manages the District’s public housing and federal housing voucher programs. The sequester will also reduce the federal Community Development Block Grant by $723,000 and HOME Grant programs by $226,000, which DC’s Department of Housing and Community Development uses to support affordable housing and community development projects.  Finally, sequestration will reduce federal funds for homelessness assistance (such as the Emergency Shelter Grant and Shelter Plus Care Grant) by $1.1 million at a time when DC is experiencing a huge rise in the number of homeless families.

Some safety net programs are exempt from sequestration, including Social Security, Medicaid, Children’s Health Insurance Program (CHIP), child nutrition, Supplemental Nutrition Assistance Program (SNAP), Supplemental Security Income, and the Earned Income Tax Credit. 

The second, and much smaller, sequestration could hit on March 27th and stems from a law passed last year that established caps to reduce funding for discretionary programs (i.e. non-entitlement programs) through 2021.  The Congress has not yet adopted a budget for 2013 and is operating on a temporary measure, or continuing resolution (CR) until March 27th.  The funding levels in the CR exceed the budget caps for 2013.  This means if Congress extends the current CR to fund the federal government beyond March 27th, it will have to reduce discretionary spending — by about $1 billion — to fit within the cap.  Many of the programs subject to the March 1st sequestration will see further cuts at the end of March.

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