Courier Post-Washington Bureau - Spending cuts will harm N.J.
8:37 AM, Nov. 23, 2011 | by Raju Chebium

WASHINGTON — New Jersey faces years of lower federal payments under automatic spending cuts that will begin in 2013 unless Congress comes up with an alternative plan.

The automatic cuts are designed to compensate for a congressional debt-reduction committee’s failure, announced Monday, to agree on at least $1.2 trillion in savings over 10 years.

The cuts will total about $1 trillion between 2013 and 2021, combined with $169 billion in lower borrowing costs. Half the cuts will come from defense programs and half will come from nondefense programs.
Officials fear they will have a devastating impact on New Jersey military bases and a host of programs and services fully or partially funded by Washington, such as special education and Community Development Block Grants.

Congress could try to delay or undo the automatic spending cuts, but President Barack Obama has promised to veto such an attempt.
Rep. Rob Andrews said the cuts will be modest. But cash-strapped local governments are worried, said William Dressel Jr., executive director of the New Jersey State League of Municipalities.

Gov. Chris Christie’s move to cap annual property tax increases at 2 percent is forcing local governments to cut programs and services. Federal funding reductions would worsen the problem, Dressel said.

“It’s going to severely impact the quality of life of the citizens and taxpayers of this state,” he said. “They pay their federal income taxes, they pay the sales tax … and they haven’t been getting back a fair dividend from the federal government or the state government over these past years.”

Social Security, Medicaid, veterans’ benefits, the Children’s Health Insurance Program, unemployment insurance, welfare and other programs benefiting low-income Americans are exempt from the automatic cuts, and Obama almost certainly will exempt military personnel.

Medicare payments to doctors and hospitals will be cut up to 2 percent. Farm price supports also will be cut.

Education, transportation and aid to states and localities will likely take the biggest hits among domestic programs, according to federal budget expert Stan Collender.

States with lots of defense contracts will suffer more than other states, Collender said, along with states with major transportation projects, those that get back more in federal spending than they pay in taxes and states where much of the land is owned by the federal government.

House and Senate committees with jurisdiction over the military will decide over the next year which Pentagon programs to cut to save about $500 billion.

The White House Office of Management and Budget will decide where to find $500 billion in cuts to nondefense programs.

Andrews, a Haddon Heights Democrat who’s served in Congress since 1991, said the cuts won’t be as large as many fear.

He said that’s because they’ll affect planned increases in federal spending, not existing budgets.

“What this will mean for most programs is they will get 1 or 2 percent less than they got this year,” Andrews said. “I don’t want to see our district, our state or our interests unfairly targeted ... (but) we should be very careful about exaggerating the impact of these decisions.”

Other analysts foresee bigger cuts.

Chris Whatley, director of the Washington office of the Council of State Governments, said states should prepare for about a 20 percent cut across the board in various federal grant programs between 2013 and 2021.

Reach Raju Chebium at rchebium@gannett.com