1. E L P ASO C OUNTY C OLORADO E L P ASO C OUNTY C OLORADO Sequestration Impacts Nicola Sapp County Budget Officer November 13, 2012

2. Presentation Overview History Sequestration Impacts From the Top Down – Non-Defense and Defense Federal Impacts State Impacts El Paso County Impacts Budget Administration2

3. History The Budget Control Act of 2011 (BCA) allowed the United States to raise the Debt Limit in exchange for caps on Discretionary Program Funding designed to reduce the deficit by more than $1.2 Trillion over 10 years The BCA further created “Sequestration” which is a procedure to automatically impose across the board cuts if there was no agreement on cutting the deficit Sequestration is to begin January 1, 2013 Budget Administration3

4. Sequestration Effects The Congressional Budget Office (CBO) estimates to be $109.3 Billion each year for ten years. Actual cuts are $984 Billion + $216 Billion that is saved in interest costs The cuts are to be divided between: National Defense National Parks Education Low Income Housing Medical Research Budget Administration4

5. Who is Exempt Exempt from cuts: Medicaid Social Security The Child Health Insurance Program (CHIP) The Supplemental Nutrition Assistance Program (SNAP) Veteran Benefits Temporary Assistance for Needy Families (TANF) Refundable Tax Credits – Earned Income Tax Credit – Child Tax Credit Certain Federal Highway Programs Budget Administration5

6. Impacts from the Top Down - Federal Impacts $109.3 Billion in spending cuts annually $54.7B in Defense spending annually $54.7B in Non Defense spending annually The President chose to exempt military personnel from sequestration, therefore defense had to be cut by an additional 10% in other places – Operations – Equipment – Capital Budget Administration6

7. Impacts from the Top Down - Colorado Impacts Significant impact on Colorado budget 25% of the State of Colorado is funded from the Federal Government Colorado will have to cut services Job losses are eminent Budget Administration7

8. Impacts from the Top Down - Colorado Non-Defense Impacts $60 Million in Non-Defense Cuts Education – No estimates on this impact yet Job Development – No estimates on this impact Health and Human Services – 7.5% Annual Reduction – $16.75M Federal & State annual reduction Budget Administration8

9. Impacts from the Top Down - Colorado Non-Defense Impacts Colorado Center on Law & Policy estimates the state will lose – More than 1,600 jobs from the $60 Million in Non-Defense cuts – Loss of 1,215 direct jobs – Loss of 416 indirect jobs Budget Administration9

10. Impacts from the Top Down - Colorado Non-Defense Impacts Budget Administration10

11. Impacts from the Top Down - El Paso County Non-Defense Impacts El Paso County Impacts – many undetermined Education – No estimates on this impact yet Job Development – No estimates on this impact Health and Human Services – 7.5% Annual Reduction – $5.4M Federal & State annual reduction Budget Administration11

12. Impacts from the Top Down - Colorado Defense Impacts Colorado is the home to a large number of Defense Contractors & Military Defense Facilities Colorado Can expect a 10% across the board cut in Federal Defense funds Up to $1.1 Billion in lost funding annually Budget Administration12

13. Impacts from the Top Down - El Paso County Defense Impacts 5 Military Installations in Colorado El Paso County is the home for Four of them El Paso County Direct and Indirect Military Presence: 80% Active Duty Personnel 77% Civilian Personnel 98% Total Family Members – Thus, El Paso County can anticipate a loss of $4.71 Billion Annually Budget Administration13

14. Impacts from the Top Down - El Paso County Defense Impacts How Does the Military Impact El Paso County’s Economy? – In 2011, the Four Military bases provided an economic impact of $5.89 Billion – Generating 25%-30% of El Paso County’s Gross Metropolitan Product (GMP) (economic base) – Based on this, the impacts could be 18,000 jobs lost in El Paso County Budget Administration14

15. In Summary Annual El Paso County Impacts: – Education$ ?,???,???,??? – Job Development$ ?,???,???,??? – Health & Human Services$ 5,400,000 – Military / Defense$ 4,710,000,000 Over 10 Years $47,154,000,000 Budget Administration15

16. Sources of Information U.S. Department of Defense – Military Installation: www.militaryinstallations.dod.mil The Greater Colorado Springs Chamber and EDC Colorado Center on Law and Policy Budget Administration16

17. Budget Administration17 Questions?