Local officials grapple with threat of 'fiscal cliff'

• Local officials warn that if there's no deal, it would be catastrophic

WASHINGTON — As huge federal spending cuts and tax hikes loom, county and city officials are grappling with how they might deal with the ramifications if Congress and the White House fail to avert the so-called "fiscal cliff."

After finishing a meeting at the White House with President Obama and other municipal leaders earlier this week to discuss the state of negotiations, Tampa's Mayor Bob Buckhorn said he was hopeful that a deal could be struck to head off tax increases for middle-class Americans before the George W. Bush-era rates expire on Jan. 1.

But Buckhorn acknowledged that he remained uneasy about what it would mean for his city and for the rest of Florida — a state that has slowly climbed out of the recession — if Congress and the White House remain at loggerheads and tax rates rise by more than $2,000 for the average American family.

"One of the last sectors of the economy to recover has been tourism, and Florida is a tourist-dependent state and that $2,000 could be the difference of whether a middle-class family takes a vacation or not," Buckhorn said . "It would be terrible for Florida's recovery."

As Republican lawmakers and Obama trade deficit-reduction plans and accuse each other of intransigence, local government officials have warned that Washington's failure to strike a deal would be catastrophic and have begun to outline what the trickle-down effects of reduced federal spending could mean for their communities.

The spending cuts proscribed — $1.2 trillion in automatic cuts to defense and domestic programs over the next decade set to be triggered Jan. 1 — were set in motion by a 2011 congressional deal with the White House to raise the legal limit on what the U.S. can borrow. The deep, across-the-board cuts were designed to push the president and lawmakers to find better ways to reduce the federal debt and deficit.

On Thursday, it appeared the two sides were no closer to hatching a deal, as House Speaker John Boehner told reporters that "the White House is so unserious about cutting spending that it appears willing to slow-walk our economy right up to — and over — the fiscal cliff."

Obama called negotiations "a work in progress," in response to a question shouted to him by a reporter as he left the White House on Thursday afternoon for a holiday party.

Obama is seeking $1.4 trillion in revenue in his latest offer, which includes raising the individual tax rates on the top 2%. Boehner opposes the tax hike and wants to overhaul the tax code instead to generate more revenue. Republicans also want more spending cuts — particularly in entitlement programs such as Medicare — which Democrats oppose.

Several local governments are gaming out what the worst-case scenario could mean for their community.

In Fairfax County, Va., in suburban Washington, D.C., officials have set aside $7 million in reserve in anticipation of a diminishing flow of federal funds into the community whose economy is closely tied to federal spending. The county's executive, Edward Long, has also called on the head of agencies to get ready for 5% in additional cuts as he prepares the 2014 budget.

The federal government only accounts for about 1% of the county's budget, but deep cuts in federal spending could have a domino effect of rising unemployment, decreased sales tax revenue and greater demand for social service programs, according to county projections.

"Almost 10% of the income of people who live in Fairfax County comes from people who work for the federal government and we also have lots of federal contracts," said Merni Fitzgerald, a county spokeswoman.

In Indianapolis, the city's public school system estimates that it could lose $755,000 next year just for special education funding.

That could mean laying off up to 10 special education teachers and up to 10 speech and language pathologists; ending a support program for parents of special-needs children; and closing a day treatment program for students with severe mental health issues.

"These are among the most vulnerable of our children," said Indianapolis Public School System spokesman John Althardt. "The children and their families are very dependent on the services, but more importantly, the people who carry out these services."

In Hartford, Conn., Mayor Pedro Segarra says if no deal is made to avert automatic cuts in non-defense spending, he calculates the city will lose as much as $4.5 million in federal funds and could lead to the slashing of benefits for as many as 7,600 of the city's residents.

Among 14 programs he said would see big cuts are those utilized by the city's poorest residents, including a health and nutrition program for women and housing vouchers.

The anticipated cuts, Segarra said, would be difficult for the city, where the unemployment rate hovers over 15% and about a third of its residents live in poverty. The federal cuts notwithstanding, Hartford has faced diminished support from the state Legislature as it grapples with its own budget constraints.

"What these cuts will do is push the community further down into poverty," Segarra said.

Contributing: Susan Davis; Maureen Groppe, Gannett