ANNAPOLIS — The federal budget sequester could reduce Maryland’s wage and salary base by about $2.5 billion and cut more than 12,600 jobs in a state that has more than double the number of federal jobs than the national average, according to a memo by state budget officials.
The memo by the Maryland Department of Budget and Management, obtained by The Associated Press on Wednesday, noted that the sequestration process is expected to reduce federal funding to the state and local governments by about $150 million. The department described the reduction as modest relative to the $9.3 billion in federal money in the state’s budget in fiscal year 2013.
The memo also noted that about two-thirds of federal funding received by the state is exempt from sequestration.
Still, federal job losses loom as a much bigger concern, because 5.6 percent of Maryland jobs are in the federal government, compared to 2.2 percent on the national average. Many more jobs are supported directly or indirectly by the state’s proximity to the nation’s capital.
While the Maryland Board of Revenue Estimates projects that sequestration could reduce employment by more than 12,600 jobs, the memo cites a report from the Center of Regional Analysis at George Mason University that suggests that direct, indirect and induced job losses could approach 100,000.
“Job losses of this magnitude would send Maryland into recession,” the memo said.
If those 12,600 job losses came, it would translate into lost revenue for state government of about $200 million a year. That would be much higher under the 100,000 figure.
The memo noted that the Department of Budget and Management is preparing a comprehensive report that will include more precise estimates in the impact sequester would bring.
Some $110 billion in federal cuts kick in Jan. 2, unless Congress figures out a way to avoid them. Defense and domestic programs would be hit equally hard, unless lawmakers in Washington find a way over the next few months to avoid the cuts.