Price tag of Sequester to States: $6 Billion


States could lose $6 billion in federal money for K-12 education, Head Start and other programs under the across-the-board spending cuts that kick in today (March 1) by midnight.

President Barack Obama’s meeting with congressional leaders Friday morning failed to avert the cuts, known as the sequester, setting into motion $85 billion in federal spending cuts.

The latest state-by-state figures come from the Federal Funds Information for States (FFIS), a service created by the National Governors Association and the National Conference of State Legislatures to track the impact of federal decisions on state budgets and programs. The figure takes into account new calculations from the Congressional Budget Office and other updates.

Across the 50 states, the federal government provides about one-third of state revenue, and in some states federal money is the largest single source of revenue.  

Many states have begun working on their new budgets for the year without knowing how much less they will get from the federal government. By the FFIS count, California could lose $635 million, the most of any state.

Many of the biggest and most costly social programs, including Medicaid, welfare and the Supplemental Nutritional Assistance Program (formerly known as food stamps) are exempt from the sequester. However, as Stateline has reported, states with military spending would be hit hard.

The president called the cuts “just dumb” after today’s (March 1) meeting with congressional leaders. “It is absolutely true that this is not going to precipitate the kind of crisis we talked about with America defaulting and some of the problems around the debt ceiling,” the president said. “I don’t anticipate a huge financial crisis, but people are going to be hurt.”

From Wall Street’s perspective, the sequester is unlikely to have a major impact on states’ credit ratings. Standard & Poor's Ratings Services said in a report Thursday that, “States and many local governments have been actively monitoring developments at the federal level, and we believe they have evaluated the potential effects of sequestration in their revenue forecasts and budgets,” S&P said.


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