No gilding potential loss to Golden State if budget impasse continues

McClatchy NewspapersDecember 3, 2012 

— Rudy Ortiz fears falling off the fiscal cliff.

The University of California at Merced scientist depends, like many of his colleagues, on federal grants from agencies like the National Institutes of Health. Now, he is nervously watching as automatic federal budget cuts scheduled to take effect Jan. 1 draw closer.

“It will be devastating for all science, not just biomedical research,” Ortiz warned in an interview. “It will set science back many years, because many young investigators that are struggling now will likely find other careers.”

The automatic budget cuts, called a “sequester,” will hit, along with tax hikes, unless White House and congressional negotiators reach a deal that so far appears elusive. Nationwide, total federal spending would fall by $109 billion the first year. For most domestic programs, the automatic cuts would amount to 7.6 percent or 8.2 percent for the remainder of the fiscal year.

No state would feel the pinch more than California. From Yosemite National Park and University of California laboratories, to the federal courthouses in downtown Fresno and Sacramento and well beyond, myriad federal operations would have to adjust. Defense contracts would be vulnerable. Grants would disappear.

On the tax side, Silicon Valley companies would lose research and development tax breaks. Individual tax rates would rise.

While many operational details remain opaque, or undecided, the real-world pain would be real.

California, for instance, is projected to lose $27 million in Community Development Block Grant funds for what remains of fiscal 2013, according to calculations by the Bipartisan Policy Center, a think tank in Washington staffed by former lawmakers and policy analysts from both parties. That’s a sizable chunk from a program that in recent years has funded planning in West Sacramento, new sewer lines in Modesto, apartment rehabilitation in Merced and better storm drains in Fresno County.

“Sequestration would have a significant impact on local communities,” cautioned Mike Lukens, spokesman for Fresno Mayor Ashley Swearengin.

No one has yet calculated how much each city might lose. Similarly, while National Park Service operations would lose $183 million nationwide, Yosemite spokesman Scott Gediman said individual parks “have not received planning guidance” for implementing cuts.

In certain programs, though, the Office of Management and Budget has pinpointed precise dollar losses. A San Francisco Bay and Sacramento-San Joaquin Delta restoration program, for instance, would lose $3 million for the long-running effort to fix the sensitive waterways.

Sequestration also would affect U.S. Army Corps of Engineers programs that maintain levee systems in Sacramento and Central California. The fiscal 2013 budget would fund flood control and coastal emergencies by $34 million and the budget for operations and maintenance by $176 million.

Judicial branch officials have, likewise, pinpointed some potential specific cuts that could hit hard in the Central Valley courthouses that serve the busy Eastern District of California.

"Our probation officers will have to reduce supervision of lower-risk offenders in order to focus limited resources on high-risk offenders,” U.S. District Judge Julia S. Gibbons told a House panel earlier this year. “Staffing at public counters to assist individuals with case filings and court services will be reduced."

Beyond direct federal programs, the sequester would dry up myriad federal grants that flow abundantly throughout the state.

Last year alone, UC Merced and California State University, Fresno, researchers secured two dozen grants from the National Institutes of Health, while UC Davis researchers raked in several hundred grants. These grants would shrink or become harder to come by, as NIH would cut funding under sequestration by some $2.5 billion nationwide. Similarly, the National Science Foundation would lose nearly $470 million in grant funding in 2013.

“The immediate impact of this cut will be that many labs will have to scale back their research or shut down completely,” predicted UC Merced Assistant Professor Mike Cleary. “The decreased funding will also mean that many labs won’t be able to support graduate students or post-doctoral fellows.”

California’s 2 million veterans, however, are spared somewhat, as the sequester exempts the Department of Veterans Affairs from the across-the-board ax.

The roughly 3.5 million Californians now receiving Social Security or Supplemental Security Income payments won’t see any reduction, either, nor would the state’s recipients of the nutrition aid formerly called food stamps. For technical reasons, a San Joaquin River restoration plan that is part of a lawsuit settlement is also exempt from mandatory cuts.

Cuts to Medicare health care providers, who currently serve 4.5 million beneficiaries in California, would be limited to 2 percent, less than that imposed on most other programs, while Medicaid benefits would be exempt altogether.

Community and migrant health facilities, such as The Effort in Sacramento, the Tulare Community Health Clinic and the Golden Valley Health Center in Merced , are shielded somewhat, with health center funding cuts limited to 2 percent.

Economist Stephen Fuller of George Mason University in Virginia estimated in July that California would lose some 225,000 jobs through next year under the potential federal spending cuts. More than half of the projected civilian job losses in California would come from defense cuts, according to his analysis.

Curtis Tate of the Washington Bureau contributed to this article.

Email: mdoyle@mcclatchydc.com; Twitter: @MichaelDoyle10

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