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The White House has released a state-by-state breakdown of the sequester's impact in the state. California is facing numerous cuts.
Over the weekend, the White House released a state-by-state breakdown of the impact of "sequestration," the $85 billion in cuts to the 2013 federal budget that will kick in on Friday (Yes! Friday!) and amount to $1 trillion over the next decade if Congress doesn't act.
Economists are divided over whether this will be a good thing — cutting spending and unleashing private-sector growth — or a major obstacle in an already weak recovery, an unwelcome political event that lops off anywhere from 0.5 to 0.8 percent of GDP growth at a time when the U.S. is only growing at around 2 percent.
For California, this is a very tricky time to be dealing with automatic spending cuts. The state's economy, a $2 trillion colossus, has been growing at a faster rate than the nation's . Unemployment has been falling. In 2012, the state finished second behind only Texas in the number of new jobs added during the year — and it didn't finish second by much.
The White House numbers are of course politically motivated. The administration wants to localize the pain, the better to get constituents on the phone to their representatives. Hey, they don't call it "checks and balances" for nothing.
So let's run through the top five hits that California would have to absorb and assess whether they're as bad as all that — or possibly worse.
1. Defense. This is the Big Boy, but it's important to note that the cuts for the 2013 budget go to "military readiness" — Pentagon cuts can't be applied to uniformed servicemen and women, so the effects would be felt in base operations and maintenance. The White House says 65,000 civilian Defense Department employees would be affected in California and that the total cost would be $399.4 million. This would come from furloughs, 22 days in total through the end of the year — one furlough day each week.
Employees wouldn't lose their jobs, but they would lose pay. Combined with the failure to extend the payroll tax cut into 2013, this will take money out of the pockets of Californians who would have otherwise spent it. Some very rough math shows that the 65,000 employees affected would lose on average of about $30 a week (but in this case it's not like you can just divide $339 million by 65,000 people and then divide by 22 weeks — pay levels will obviously vary).
Bottom line: With the state sales tax already increased, civilian defense employees in California don't need to have less money in their pockets.
2. Education. The damage here from the sequester for 2013 adds up to about $150 million in cuts that would affect primary and secondary teachers, as well as teachers who work with kids who have disabilities, the White House says. Almost 2,000 teachers and aides could find their jobs "at risk," meaning that they could be laid off.
The percentage of funding that California receives from education isn't enormous — 14 percent, according to the Public Policy Institute of California — but it isn't insignificant, either. Total funding for K-12 from all sources in 2011-12 was $64 billion, according to the California Department of Education, and of that, about $7 billion was federal funds. So the sequester would affect a bit more than 2 percent of that.
There are over 3 million primary and secondary teachers in California, so the sequester could place less than 1 percent at risk.
Bottom line: The California education budget won't take much of a hit if sequestration becomes a reality. That's cold comfort to potentially thousands of teachers, but the budget is huge and the cuts won't take away much from the federally-funded slice of the pie.
3. Public health. Hits in the low single-digit millions for first responders and HIV testing, warns the White House. But more than $12 billion chopped from substance abuse treatment and prevention. It adds up to roughly $17 million total.
But the state's health and human services budget is Sacramento's biggest outlay, larger than the education budget. We're talking tens of billions. It won't endure too much sequestration anxiety.
However, at a more alarming level, $1 million will be elimated from federal funding for state vaccination programs, which the White House says could deny protection to 15,810 children in the state. That number is so high because the federal government covers 95 percent of the cost of keeping children vaccinated up to age 18, according to the National Conference of State Legislatures.
Bottom line: Nothing much touched here, but again, that won't be much solace to substance abusers who want to pursue treatment through state programs. And withdrawing any federal support for vaccinations can impose risks that are statistically marginal until a bunch of kids get sick and there's an outbreak that could end up costing far more than $1 million.
4. The environment. The sequester takes away $14 million in funding for clean water and air, and for fish and wildlife protection. Federal environmental funding for California in 2012-13 is slated at $286 million. Losing almost 5 percent of that is notable — but federal funds as a percentage of California's overall environmental protection budget have been declining since 2010 and is down in 2013 by 11 percent.
Bottom line: The sequester just adds insult to injury where the budget trend for California's environment is concerned.
5. Meals for seniors. The White House says that elderly folks would lose $5.4 million in nutritional assistance. The California Department of Aging (CDA) reports that it gets 84 percent of its funding from the federal government and spends most of it on nutrition.
In 2011-12, it spent over $80 million, so this is one of those areas where the percentages make a big difference. One can assume that the CDA spends all of its federal dollars, so nearly 7 percent of what it devotes to feeding needy seniors would disappear due the the sequester.
Bottom line: Just by the numbers, this looks like the state program that could be hit the hardest by sequestration, even though it probably represents a neglible loss of jobs.
So, if you drill down into the White House numbers for California and the sequester, you see some pain for civilian defense workers and some threats to a small number of teachers. In terms of overal impact on the state's growth, the sequester should be limited. And some of these cuts could come in areas that were already trimmed by the state's budget process.
But two groups that may truly suffer if the now likely event that the sequester happens are kids who need protection against common diseases and hungry old people. Those cuts look relatively small on paper — but in the real world, they could loom much larger.