Central Virginia businesses brace for fiscal cliff consequences - NBC12.com - Richmond, VA News

Central Virginia businesses brace for fiscal cliff consequences

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RICHMOND, VA (WWBT) -

Virginia, with its high number of federal employees and contractors, could be one of the hardest hit states if Congress does not find a solution to the fiscal cliff. That's the looming cuts to defense and federal spending and expiring Bush-era income and capital gains tax cuts.

Central Virginia alone has nearly 1800 businesses that earn at least part of their revenue from Department of Defense contracts.

Greater Richmond ARC has placed more than 100 people with disabilities in federally funded jobs, such as at General Defense Supply of Richmond. The fiscal cliff has ARC worried.

Explained ARC Vice President Matt O'Connell, "We provide custodial services, we provide grounds maintenance services, we provide administrative support services, all of those are easily cut."

Many of Central Virginia's roughly 1800 businesses with Defense contracts are in industries you might not think of: food production for bases, office cleaning, manufacturing, logistics, even hotels. Then there are civilian businesses that support some of those businesses.

Said Michael Cassidy, President of The Commonwealth Institute, an independent economic think tank, "Folks who are running a dry cleaning business or a car repair shop are also connected because their customers themselves are working for contractors."

Some businesses, like General Defense Supply of Richmond, tell us they're waiting to see what happens, no layoffs are planned. Some companies are bracing for possible cuts to staff and revenue. And some have already faced cuts from last year's Budget Control Act, a more than $1 trillion dollar federal budget cutting measure. Add to that, if the Bush-era tax cuts are not extended, that could leave less money in every worker's pocket.

Said Cassidy, "Obviously upper earners would see a very significant increase in their tax bills. But all earners would see a significant increase."

A study by the Pew Center for States reports that Virginia would lose $10 billion in economic activity and nearly 120,000 jobs. A George Mason University and Chmura Economics & Analytics study puts Virginia's job loss at 207,571. But that's if no agreement is reached. Many analysts expect Congress to come to some sort of agreement. The question is what will the agreement be? And how much of the problem will it resolve? And there's high concern until they do.

Said Cassidy, "It seems to take a near crisis to get Congressional action on just about anything in terms of the stalemates we regularly deal with up there. I think this one speaks to that, on steroids."

That's what is leaving businesses, people, and organizations like ARC worried how cuts could affect them, or the people they serve.

Said O'Connell, "They would lose that source of income, that sense of pride, self worth of having a job."

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