Businesses, Military Bases Preparing For Sequester
The clock is ticking on automatic federal budget cuts, known as the sequester, that will go into effect at the end of this week. In the Southwest one of the states that could be hardest hit is New Mexico. The upcoming deadline has government agencies, local businesses and military bases on edge.
At RTD Hardware just outside Las Cruces in southern New Mexico, a trickle of customers is greeted warmly by staff.
Each aisle is adorned with a bright yellow state flag stuck beside a striped American flag. The locally owned shop is neatly supplied with all the tools a customer would need to solve a plumbing calamity or make over a backyard. What they won't find are the tools to fix the federal budget crisis.
Store owner Richard Trujillo has already begun to see the effects of sequestration on sales.
"Oh, it's reflected in the business absolutely," he said. "Along with our walk-in customers and government sales, everybody is tightening their belt."
RTD Hardware is a family-run shop, named after Trujillo's three daughters. Roughly a quarter of his business depends on contracts with the federal government and his regular customers are federal employees.
New Mexico is home to two national research labs funded by the Department of Energy and four military bases.
One of those military bases is White Sands Missile Range, which tests the weapons soldiers use in combat overseas. It's the largest testing range in the country at 100 miles long and 40 miles wide, most of it barren desert landscape. Some 9,000 people work here and more than 80 percent of salaries go to civilian workers or contractors, like RTD Hardware. It's an important local economic driver.
"Our regional impact is about $2.3 million a day to the regional economy," said Monte Marlin, public affairs officer for the base.
Currently, White Sands Missile Range is under a hiring freeze, it has stopped unnecessary travel and training, and may not renew all contracts with outside businesses. There's also a chance of furloughs for civilian employees of up to 22 days -- about a month's worth of pay.
Multiply these troubles statewide and the picture looks bleak, according to Chris Erickson, an economist at New Mexico State University.
"New Mexico has about twice the number of federal employees of the national average," he said. "We have about 4 percent of statewide employees who are federal, compared to about 2 percent nationally."
Erickson and others estimate New Mexico could lose upward of 28,000 jobs within two years of the sequester. That includes both direct and indirect losses. A census study in 2010 showed federal dollars make up one third of the state's GDP -- among the highest in the country. New Mexico's Economic Development Secretary, Jon Barela, said lawmakers are trying to change that.
"It is very, very important that we begin to diversify New Mexico's economy to create a more robust private sector that's not as dependent upon these federal jobs," Barela said.
Currently a package of bills is making its way through the state legislature, aimed at making New Mexico more attractive to private businesses. The state has had negative job growth in the past two years, but there has been one bright spot: cross-border trade.
That too could suffer from the sequester. Homeland Security Director Janet Napolitano testified before Congress earlier this month, saying the sequester could reduce staff at the ports of entry.
"On the Southwest border our biggest land ports could face waits of five hours or more functionally closing these ports during core hours," she told the Senate Appropriations Committee.
Meanwhile, businesses like RTD Hardware are holding their breath. Company Vice President Theresa Gonzalez says the store is holding off on ordering non-essential inventory and focusing on improving customer service.
"So everybody is just waiting and waiting for more money, and so this is just adding to the stress," Gonzalez said.
Congress has until Friday to act before the automatic cuts go into effect.