On Thursday, 150 Tobyhanna Army Depot employees were honored with an early retirement party. It was a retirement the region’s largest employer offered as a way to scale back spending in the face of the looming mandated federal budget cuts known as sequestration.
The budget concerns impacting Tobyhanna are playing out throughout the region as federal government employees and agencies — and even programs supported by federal funds such as Head Start, police departments and small businesses — are bracing for the government’s ax to slice 15 percent or more of across-the-board funding.
“This is a serious issue,” said Austin Burke, the head of the Greater Scranton Chamber of Commerce, who was among a group of officials who spoke at a Scranton press conference called Friday by U.S. Sen. Bob Casey, D-Scranton. While many are calling the cuts “major,” Burke opted for another term.
“I would substitute ‘dangerous’ for ‘major,’ ” Burke said.
He said that in an already dicey time for the nation’s economy, to cut back on people’s pay or terminate their jobs could have a trickle-down effect on the entire financial web.
“It could spiral out of control,” Burke said.
Because Republicans and Democrats in Washington could not reach an agreement to avert the sequestration by Thursday’s deadline, a previously agreed upon budget-cutting scheme known as sequestration will go into effect. Rather than cutting targeted programs that might be able to withstand the loss of funding in the short term, the cuts are across the board and broad.
“We need to cut spending but in a smart way,” said Casey. “The indiscriminate nature of the sequester will be harmful to Northeastern Pennsylvania. Congress needs to come together on an alternative to the sequester that will reduce our deficit, keep the economy moving forward and protect the vital needs of our region, including our defense industry, our police and our small businesses.”
Tobyhanna Army Depot, which employs more than 5,000, is still trying to figure out how to best handle the pressing budget cuts, spokeswoman Jacqueline Boucher said. Some estimates have pegged the loss for the depot at more than $300 million.
Furloughs are on the table — with one scenario resulting in every employee being scaled down to a four-day work week, meaning a loss of 20 percent of a weekly paycheck. Boucher said multiple options are on the table and nothing had been finalized as of Friday.
While the macro focus of some people has been the impact the cuts would have on national parks, the IRS during tax season and the military, at the micro level, the cuts might be felt by those who can least afford it.
It remains unclear what effect the sequester will have on a number of area human service organizations and agencies, but among those expected to be impacted are: Meals on Wheels, The Luzerne County Housing Authority, the supplemental food program known as Women, Infants, and Children (WIC), the Child Care Assistance Program, federal student loan programs and Head Start.
Subsidized housing affected
Dave Fagula, executive director of the county housing authority, said there’s no doubt subsidized housing programs will be affected. He expects the authority’s $2 million modernization subsidy will be clipped by about $200,000, and the $4 million subsidy for housing could be an $800,000 shortfall.
“I doubt if we’ll be able to put any new people on the Section 8 (subsidized housing) program,” he said. “It could affect up to 80 families who (otherwise) might have gotten assistance.”
Fagula said the U.S. Department of Housing and Urban development funded 92 cents on the dollar operating subsidies in January and February, but he was informed Friday that the subsidy would be cut back to 80 cents for March. He hopes it’s not reduced more. He also was informed HUD would furlough all full-time employees a total of seven days between May and August.
Fagula said HUD requested $750 million less in its 2013 budget than needed to meet its own operating formulas and effectively raided the reserve funds of housing authorities by reducing subsidies to authorities that had them. “I was hit for about $1.3 million that I needed for operations because we are constantly underfunded by HUD,” he said.
Because the federal government doesn’t allow authorities to raise rents on low-income people, said Fagula, he doesn’t know how the differences will be made up. He guessed that reduced building maintenance would be the first option.
Trula Hollywood, executive director of the Area Agency on Aging for Luzerne/Wyoming Counties, said she is awaiting direction from the U.S. Administration on Aging, which she doesn’t expect to receive until early next week.
Sequestration should have “no immediate impact” on services provided through the Aging Network, said Hollywood, “but many of our services such as home-delivered meals are administered by the Older Americans Act and may be affected at some point.” The agency’s budget for home-delivered meals and meals at senior centers is $2.5 million.
“Once we receive direction from the U.S. Administration on Aging, the Pennsylvania Department of Aging will then, in collaboration with the Area Agencies on Aging, determine next steps with a goal of minimizing disruption to programs,” Hollywood said. “The Luzerne-Wyoming AAA is fortunate to not have waiting lists for any in-home services at this time. I hope to keep it this way.”
Municipal services could be affected as well.
Wilkes-Barre Mayor Tom Leighton said he expects that cuts in federal grants eventually will place a greater burden on the city’s general fund.
“We rely on federal spending to complement city services ranging from police operations to community development,” said Leighton. “The sequester’s draconian cuts inject a level of uncertainty in the economy when it can ill afford it. Many city revenue sources are dependent on the economic climate, so we will have to monitor the impact of the cuts very closely as they take effect.”
Sallie Mae, a financial services provider for student loans, does handle federal loans, but it’s unclear how the sequestration would, if at all, impact its operations — including those performed by its 850 workers at its Hanover Township center.
“We are aware that the sequester will affect the U.S. Department of Education, but it is unclear what those effects might be. We will work with the department to determine the best way to implement any reductions to funding,” said Nikki A. Lavoie, Sallie Mae’s corporate communications manager.