July 21, 2011
El Paso County politicians regularly say they want to reduce federal spending, but the truth is the county takes in more federal money than just about any other place in Colorado.
And as lawmakers in Washington D.C. wage war over federal spending, El Paso County’s reliance on federal dollars means the region’s economy could suffer with spending cuts.
In 2009, the most recent year with data available, $10.8 billion in federal funds poured into El Paso County, according to a Gazette analysis of the Consolidated Federal Funds Report, published by the U.S. Census Bureau. Adjusted for inflation, that’s more than double the amount in 2000.
The report includes federal money paid to states, local governments, grants and direct loans such as mortgage insurance provided by the Federal Housing Administration.
The county is more dependent on federal money than most other places in Colorado and the nation. On average, El Paso County received a little more than $17,800 for every man, woman and child. Colorado averaged $14,000 per person, and the U.S. average was just more than $10,500 in 2009.
“This tends to be a conservative place where we think we’re not overly dependent on the government, but we are,” said Fred Crowley , senior economist for the Southern Colorado Economic Forum.
Federal spending accounts for one-third of the local economy, according to Crowley and Tom Binnings, a partner at Summit Economics in Colorado Springs. “We’re significantly more reliant on federal dollars than the average community,” Binnings said. “That means (if there are cuts) we could be significantly more hurt than other communities.”
MAJORITY OF LOCAL FEDERAL DOLLARS NOT SPENT ON PET PROGRAMS
In El Paso County, the largest categories of federal spending in 2009 was on such things as salaries, Social Security and federal retirement payments.
The largest categories of spending in the county in 2009 included:
• $2.53 billion for military salaries. The county is home to six military installations, including Fort Carson and the U.S. Air Force Academy.
• $2.53 billion for federal contracts for items such as military technology and custodial service at federal facilities.
•$613 million for Social Security retirement insurance.
• $573 million for federal retirement and disability payments.
El Paso County’s economy would take a hit if lawmakers were to make military cuts, Crowley said. However, he doesn’t think that will happen.
“The military is a sacred thing,” Crowley said. “Right or wrong, it doesn’t matter, but I don’t see them changing that.”
U.S. Rep. Doug Lamborn, who represents El Paso County, insists that cuts need to be made. But not to the military, he said.
“If there were to be a debt negotiation that created major defense cuts, our community would suffer disproportionately and that does worry me,” Lamborn said.
LAWMAKERS CRITICIZE FEDERAL SPENDING
El Paso County leaders have blasted federal spending for years. In May 2010, former Mayor Lionel Rivera said he didn’t want the city to support legislation that could bring stimulus funds to the city because it would lead to more deficit spending.
“We’re having to suck it up. The federal government should, too,” he said at a City Council meeting. The council decided not to support the legislation.
County Commissioner Amy Lathen has been leading the charge locally and nationally to encourage counties to reject federal money — specifically one-time funds that can’t be sustained or money with strings attached, she said. She said federal spending is so overwhelming that the dollars being spent don’t seem real.
“I call it funny money. It’s not money that the citizen’s who are currently working will see,” she said in a recent interview. “It’s our children’s children who will be paying that debt.”
She said if all counties cut programs from federal funds that are unsustainable, it could make the difference for the federal deficit.
“Accumulatively, it’s a ton of money,” she said.
Lamborn called federal spending “totally out of control” in a recent interview. He’d like cuts to Medicaid that would change its structure but not affect services. He’d also like to cut some of what he called “wasteful” clean energy programs.
TALKS OF CUTS WORRY LOCAL AGENCIES
Federal spending spreads throughout El Paso County, Binnings said. For example, when the government pays a soldier, the soldier typically spends the money at local businesses, which in turn employ others. Those employees then support other businesses.
Also, Binnings said, El Paso County has a significant number of high-tech companies that depend on federal contracts for their livelihood and nonprofit organizations that rely on federal grants to provide services.
One of those agencies is Peak Vista Community Health Centers, which provides medical, dental and behavioral health services to low-income people.
Federal grants make up 15 percent of the organization’s $47 million operating budget, said Pam McManus, Peak Vista president and CEO. Those funds are used for such projects as a new school-based health center at Falcon Elementary School and a mobile medical office. Potential federal spending cuts, especially changes to Medicaid, could be disastrous for organizations like Peak Vista, McManus said. In 2009, El Paso County received $636 million in Medicaid and Medicare funding.
“Any chance to Medicaid that would limit benefits, eliminate coverage for some people, or increase co-payments for patients would not only have a negative impact on health center patients but would put health centers at great risk of financial failure,” she said.
ECONOMISTS SAY THAT CHANGES ARE NECESSARY
Crowley and Binnings both say that it is unhealthy for El Paso County to be so reliant on federal dollars. The dependence sets the county up for a tough fall if and when federal cuts occur, they said.
“We’ve known for decades that we’re too reliant on the military and federal government,” Binnings said. “We improved for awhile, but now it’s not too far a stretch to say that we are back where we were.”
Crowley said he would like to see the county attract younger entrepreneurs to help diversify the economy.
But change takes time, and the federal cuts could come sooner than later, Binnings said.
Federal funds flowing into El Paso County have been steadily increasing:
2000 $4.3 billion
2001 $4.8 billion
2002 $5.2 billion
2003 $6.6 billion
2004 $7.03 billion
2005 $7.1 billion
2006 $7.6 billion
2007 $8.07 billion
2008 $8.2 billion
2009 $10.8 billion
* Amount is actual dollars, not adjusted for inflation
Source: Gazette analysis of U.S. Consolidated Federal Funds Report
Contact the writer at 636-0274.