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May 7, 2013 11:55 PM by Tony Spehar - tspehar@koaa.com

How has the sequester affected Southern Colorado?

It's been over two-months since the "sequester" began, in the debate leading up to the deadline when $1-trillion in automatic federal spending cuts went into effect lawmakers on both sides of the aisle warned of the dire consequences the nation would face if the sequester happened. So, what has happened in Southern Colorado?

The sequester was put in place because lawmakers were unable to come to an agreement about how to reduce the federal deficit and had reached the deadline when, legally, automatic cuts had to be put in place. Lawmakers warned that the impact of the cuts would be felt immediately and the effects would be widespread. Economists are saying, so far, that isn't quite the case.

When the issue of sequester cuts began the greatest fear experts had locally was the possibility of a loss of work for contractors on military bases, a major part of the economy.

News 5 was contacted by numerous employees of military contractors who had been furloughed or had benefits reduced because of the sequester. People have been hard hit by the spending cuts and if that trend continues it could affect everyone.

"That is the biggest concern, certainly to everyone in El Paso County, because as you lose a primary job from your economy you have a multiplier effect," explained Dave Rose, spokesperson for El Paso County Government. "If unemployment goes up there will be a greater demand on the department of human services."

Rose told News 5 that increase in demand hasn't happened yet, but they are preparing for it if the sequester continues. He also said county leaders have enacted some spending limitations and are preparing to re-implement some budget adjustments developed during the 2008 economic downturn.

Local economists say it's very easy for many people to dismiss the sequester because it only affects federal spending, but the economy of our region is dependent on that spending.

"Something I don't think the population realizes, the military or the federal government expenditures in total, not just the military, they represent over 40-percent of local economy," described University of Colorado Colorado Springs Economist Fred Crowley.

Crowley told News 5 that so far the local effects of the sequester have been very limited. But, if lawmakers reach no deal to reduce the deficit and the sequester continues he's worried about how the uncertainty will affect business development in Southern Colorado especially for small businesses.

"Starting a new business is risky by itself, the estimate is seven out of ten don't succeed after five-years," he explained.

But, so far, Crowley said the economy in Southern Colorado has actually grown since the sequester began. Housing development is up and Fort Carson has added a new helicopter brigade, which has brought thousands of soldiers who are spending money that fuels the local economy.

However, the longer the sequester is allowed to continue the more we will all feel the effects and it will become hared to bounce back from it.

"I thought there was no way they could be so inconsiderate, that is the nicest way I can describe it, and not recognize this will have some serious consequences in some pockets of the economy," Crowley said of the debate in Washington.

Frustration with the situation is something shared by city and county leaders.

"The Washington term is kick the can down the road, " said Dave Rose. "But, the can is still there."

Economists say it is unlikely Southern Colorado will start feeling the broad impacts of the sequester in 2013, but if the sequester continues into 2014 the consequences will be felt by more people.

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