Tribal Related Programs stand to lose $386 million in budget sequestration

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On March 1, 2013, at twelve p.m., Congress and the President were not in agreement on a deficit reduction strategy.

At the Department of the Interior, they were faced with implementing over $800 million of reductions over the next 7 months. Because the reductions must be implemented in a shortened, 7-month period, the projected effective impact is a 9 percent reduction on Interior funded programs, including the BIA.

Therefore, Interior expects that impacts to the public will be felt in hundreds of communities around the Nation. Interior, like other federal agencies, and the CSKT Tribes, is facing very difficult choices in how to implement the budget reductions.

Agencies and decision makers are managing reduced budgets through hiring freezes and tough controls including reducing overtime, compensatory time and the use of employee furloughs. Travel costs, conference spending, training and performance awards and wage increases will become a thing of the past. Grant programs will be reduced including reducing or eliminating contracts and cooperative agreements.

Even though each agency is implementing mitigating actions, it is still expected that thousands of permanent DOI funded employees will be furloughed for periods of time up to 22 workdays. The numbers of employees and the duration of employee impacts will vary from bureau to bureau and program to program.

Once the full impacts of budget deficit reduction are known, each agency will communicate the full impacts of sequester implementation to external stakeholders – Tribes, States, partners, grantees, and contractors.

The CSKT are waiting for notice from as many as 50 different agencies in terms of funding reductions and grant impacts. Grantees and contractors have not yet been informed about the full impacts to existing programs.

Most “budget watchers” are speculating that the reduced budget impact to Indian Country will be significant and devastating. Tribal folks will see a double whammy, if they depend on both Tribal and State funded programs. Most federally funded programs will see a budget reduction annually between now and 2021, as congress works to reduce $1 trillion in expenses and debt.

On March 1, 2013, the Indian Health Service was projecting a 5.1 percent reduction that could translate to a reduction of over $219 million and a loss of primary health care and disease prevention services.

The only good news is that federal Pell Grants are exempt from sequestration as well as programs like Medicaid and food stamps.

George Waters, the Tribes Federal Lobbyist in Washington DC, said “it is really confused and the story (impacts) changes every other day…On March 1, 2013, OMB will release guidance on the proposed cuts. The BIA reductions are planned at a 5 percent cut, but depending on the time frame, it is a net 10 percent reduction (6 months into the year)”.

The precise impact of the budget reductions will be influenced by how OMB defines the programs, projects and activities within department budgets. The cuts are supposed to be applied equally across these programs, projects and activities (PPAs). However, the definitions of the accounts vary across agencies. OMB has asked departments and agencies for their interpretations of PPAs, but the information received by OMB has not been fully shared with the public.

The effects of the sequester may phase in slowly over the next two months. The law generally requires 30-day notice before furloughs. Other actions, such as hiring freezes and a slowdown in contracting, could happen much more quickly. Once the cuts begin, government furlough notices will follow, beginning in April at the earliest. Federal departments and agencies have not issued any furlough notices yet, although defense officials and others have warned that hundreds of thousands of civilian employees would face the temporary layoffs. Officials have said they expect workers at most agencies to be furloughed for one day every two-week pay period, while Pentagon officials have said they expect furloughs of one day per week for workers at the Defense Department

While agencies have some discretion on when to make the cuts, if they delay the cuts and there is no deal before the fiscal year ends, deeper cuts would have to be made later in the year.

Needless to say, both the Republicans and the Democrats are trying to blame the other side for who is to blame for the sequester’s impact. However, no solid indications of compromise are currently available. As a recent CNN headline states, “More spin than solutions as spending cuts near.” The choice facing the two parties is simple, but their positions seem entrenched at the moment:

Republicans could agree to more taxes, but insist they won’t. Democrats and the White House could blink on a cuts-only package but say they won’t. All sides could just call the whole thing off and either punt or ditch the sequester entirely. Or one side or the other could agree to cave, provided they extract something else from the other party. Republicans did just that earlier this year when they passed a debt-ceiling hike in return for Senate Democrats’ agreement to pass a law delaying congressional pay unless each chamber produces a budget.

Senate Democrats and Republicans are working out plans for upcoming votes on competing alternatives to the sequester, but so far there is no agreement and no scheduled meeting to discuss alternatives.

The Democrats have a $110 billion sequester-replacement proposal (S. 388). This plan would replace automatic cuts with a tax increase on persons with incomes of more than $1 million, eliminate some direct farm payments, and restructure some defense cuts. House Republicans twice passed bills in the last Congress that would push off the sequester by replacing Defense cuts with cuts from non-defense spending (and no new tax revenue). Those bills died at the end of the 112th Congress. They may introduce a new such bill soon. However, it will not get Democratic support without new revenue in addition to cuts. Therefore at the moment there is an impasse.

The CSKT Tribes are watching the national front anticipating some negative impacts, while keeping an eye on incoming revenue at the local level. In the months of October, November, and December 2012, the CSKT received $5,330,129.33 in total revenues. The majority of revenue was Kerr Dam Rental of $4,798,894.66 followed by $91,201.97 for Timber Stumpage and $62,456.47 for Construction (Indian Preference) fees. Through December 31, 2012, total revenue was received at 21.48 percent of projected which is below the ideal 25 percent.

Tribal Chairman, Joe Durglo stated that “Tribal Programs are being asked to remain efficient and to plan for some budget reductions in the 2013 budget period. The exact percent of reduction is not yet known, as federal budget reduction details are not yet fully known”.

The CSKT Tribes are served by the Northwest Region, BIA, located in Portland, Oregon.

Budget reduction plans in the Northwest are centered on eliminating travel, some employee furloughs and hanging onto BIA year end funds from 2012, to plug the holes from 2013 reductions.

Overall Indian programs will take an estimated $386 million in reductions between now and September 2013.