Sequestration Will Impact Iowa - ABC5 News Des Moines, IA

Sequestration Will Impact Iowa

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By Ron Marasco


Sunday night the White House released details on how the sequester cuts would affect all 50 states.

ISU economist Dave Swenson says Iowa could lose nearly $300 million in direct federal funding.

We've come close to these fiscal deadlines before.

"I think there is a good chance the sequester will happen this time," said Tom Root, a Drake University associate professor of finance.

Unless Congress acts by Friday, many state programs like education, healthcare, and law enforcement will be impacted.

"Do we want to make those cuts now and slow down what's an already weak recovery, or do we wait to do that for two months, six months or a year, or however long it takes Congress to strategically plan," said Root.

Kevin Baskins works for the Iowa Department of Natural Resources.  He says the impact will be minimal because they already budgeted for the cuts this year.

"Obviously long–term it would be more of a concern," said Baskins.  "As we get into the new fiscal year, which typically starts on October 1st, once again we'll have to see where are the numbers and if there are any substantial reductions."

The DNR would stand to lose more than $3 million if sequestration happens.

Government loan guarantees for small businesses could also dry up.  But Kristin Failor, director of the Iowa National Federation of Independent Businesses isn't worried.

"If anything, they're watching it with kind of a chuckle," said Failor.

She says many small businesses have already cut 2% of their budgets.

"If the federal government can't find a way to cut 2%, and not collapse the entire economy, they shouldn't be there," said Failor.

Other programs like Head Start, job search assistance, and meals for seniors will also take a hit.

Swenson says Iowa could lose nearly 3,600 jobs, and household incomes would decrease by more than $265 million if sequestration happens.

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