News Column

Federal Funding Cuts Would Touch Broad Spectrum in N.M.

Feb 18, 2013

Brook Stockberger

The collective feeling of many of those who work for or receive funding from the federal government can be summed up in one word: Ouch.

Whether it's the military, Las Cruces Public Schools, New Mexico State University or even small business owners who count on government-backed loans, a lot of people are keeping their eyes on what the White House and Congress do or don't do by March 1. That's when steep federal budget cuts -- known as sequestration -- are set to take place if no deal is reached to delay or amend them.

NMSU could see a cut of as much as $13 million; LCPS could see a step back in federal funding of about $2 million; the city of Las Cruces could potentially lose $1 million or more.

Those are estimates based on federal funding levels and the proposed cuts. Still, no one knows for sure what the hit would be, or if the cuts even take place.

"It is not possible to know until the various federal agencies decide exactly how they are going to implement the cuts," said Jim Peach, economist at NMSU.

Non-defense discretionary spending is scheduled to be cut 8.2 percent, Peach's colleague at NMSU, Chris Erickson. But exactly how that impacts specific institutions is difficult to predict.

"It is very hard to put a dollar figure on the impact of sequestration," Erickson said. "We are already seeing the effects to some extent as federal agencies have been husbanding their funds in anticipation of sequestration."

LCPS

Superintendent

Stan Rounds said the Las Cruces school district receives about $30 million in federal funding. So a cut at 8.2 percent would mean about $2.4 million less in funding for the district.

"The good news is that when we built this budget for the current year, we understood sequestration could be an issue," Rounds said. "We have planned for it, for the current year."

Rounds added he "feels very good" there will not have to be elimination of jobs. But programs will have to go under the knife.

"We have to redesign programs," he said. "What we're having to do is cut back programs to meet anticipated cuts. That means less services for the kids, less support for the kids."

NMSU

"We do know that non-defense discretionary spending is scheduled to be cut 8.2 percent, which includes research funding as well as funding for financial aid," Erickson said. "But you just can't say that this means that NMSU's federal funding will be cut 8.2 percent. Research funding, for example, is allocated through a competitive process, and NMSU researchers may do better or worse than average.

"Financial aid funding follows the student, and NMSU students tend to be lower income so qualify for more," he said.

As of the last fiscal year, N.M.SU's expenditure budget for the entire system was $677 million. Minerva Baumann, director of media relations, said the school received about $163 million from the federal government. That means, if NMSU does experience an 8.2 percent cut, there would be about $13 million less coming into the university, which, by comparison, is a little bit less than the school's athletics budget of about $16 million.

City government

As with NMSU and LCPS, the city of Las Cruces does not know how much of a potential drop in federal funding it would face.

City Manger Robert Garza told the Sun-News the city is looking into those numbers. In December, when an initial fiscal cliff loomed, Garza said then the city stood to lose $1.7 million in revenue through possible federal funding cuts from the Federal Transit Authority, Community Development Block Grants and Federal Aviation Administration.

Business

Jennifer Craig with WESST -- which helps entrepreneurs with funding, advice and training to start or expand a business -- said a scale back of federal funding could have an adverse effect on government-backed loans, such as Small Business Administration loans.

"Some of those loans are guaranteed 80 to 90 percent, that's a huge guarantee," Craig said. "If they cut back in guarantees, in this economy, it'll probably keep lenders very, very cautious, not that they aren't already."

Ramiro Alcala owns Las Trancas restaurant, 1008 Solano Drive. The businessman said he wants an SBA 504 loan so he can expand his parking lot. He said it is tough enough right now to get a loan, let alone if the government steps back on guarantees.

"I've had a lot of trouble getting it approved; they want your income to be so high, that when I make that amount of money, why would I need a loan?" he said. "(With cuts) People would never expand or anything."

Craig said a further tightening of credit will have a chilling effect on entrepreneurship.

"Cutting that kind of funding will have a trickle-down effect and hurt small business, especially start-ups," she said.

Jobs

"A tighter federal budget is likely to reduce growth rates of employment and income in Las Cruces and throughout New Mexico," Peach said. "In turn, sectors such as the local housing market and retail trade could be in for some trouble as well."

Sarah Nolan, executive director with CAFe in Las Cruces -- a nonprofit organization that works with low and moderate-income families to help shape public policies -- said she is concerned.

"We're definitely keeping an eye on the sequester conversation," she said. "We're concerned about the effects because so many of our jobs are government based. We're keeping an eye on it."

-- Steve Ramirez contributed to this story



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Source: (c) 2013 the Las Cruces Sun-News (Las Cruces, N.M.)