Trio of Kitsap-Area Credit Unions Joining Forces to Support Members During Sequestration
March 12, 2013
March 12, 2013
As the effects of sequestration budget cuts become evident across the nation, three credit unions in Washington’s Kitsap County are teaming up to proactively provide their members with the resources and support needed to bridge any resulting financial gaps or challenges.
Connection Credit Union, Kitsap Credit Union and Peninsula Community Federal Credit Union will host a Town Hall meeting on March 26 to bring together military leaders, community organizations and credit union leaders to discuss sequestration and its ripple effects.
While the perception is that sequestration’s impact will be confined to federal employees and the military, Peninsula President and CEO Jim Morrell explained that especially in a community like Kitsap, where much of the activity and employment is generated by a naval base, the challenges created by the mandatory budget cuts are leaving almost none unaffected.
When members started voicing concerns and asking for advice, Morrell, Kitsap President and CEO Elliot Gregg and Connection President and CEO Scott Prior began to search for solutions.
“We started getting together to figure out how we could, as a collaborative effort, step in to provide some assistance to the community in helping them with things like budgeting and thinking through [their finances],” Morrell said. “When you work for the government, civilian or not, it’s a rather certain payroll. They don’t typically have any fund to assist individuals through a furlough situation.”
The naval base in Kitsap County has three main components: a submarine base, a shipyard and a small navy port. The shipyard and submarine base employ a total of 31,000 individuals, including roughly 16,000 civilian workers at the shipyard.
“And related to that operation, there are also contractors and sub-contractors that get their work from the projects that the shipyard pursues,” Morrell said, illustrating how sequestration has illuminated a the tangled web of connections between government funding and the income of so many community members—and credit union members. “Many projects were put on hold because the Department of Defense and the Navy weren’t sure how things were going to work out with Congress.”
The most obvious result of the budget cuts may be the mandatory furloughs put in place for many shipyard employees, which could cut employee work time by one day per week for 22 weeks.
“That is, in essence, 20 percent of some people’s household income,” Morrell said.
In some cases, one financial speed bump has the potential to snowball into something much more significant.
“If people’s ability to pay their debt is encumbered and that begins to reflect adversely on their credit, that could have implications to how their security clearance is evaluated and approved,” Morrell said. “And if that security clearance is not approved, then it wouldn’t be a 20 percent reduction in household income. It would be a 100 percent reduction in household income for those people who were working on the base, because they can’t get in.”
Now, indications are that there may be some workarounds for such cases—some room on the Department of Defense’s part for interpretation—but it still gives an idea of the depths to which sequestration could potentially change people’s lives.
The sequester has its origins in the Budget Control Act of 2011—known more commonly as the debt ceiling compromise—when it was meant to serve as incentive for the so-called “Supercommittee” to agree on $1.5 trillion in budget cuts over the next decade.
Had the committee managed to agree to a plan by Dec. 23, 2011, the sequester would have been avoided entirely. The committee never came to an agreement, however, and a deal delayed the sequester until March 1.
The sequester cuts all discretionary spending by $109.3 billion per year each year from 2014-2021 after cutting $85.4 billion this year. While most programs will see their scale and capabilities reduced, no programs will be eliminated entirely.
Morrell said that for the time being, most of the outreach related to the budget cuts has been in the form of financial counseling and education, helping members decide, for example, whether to take out a new auto loan or to wait until the sequester has passed.
Whether that assistance eventually takes the form of special no-interest loans or other sequester-specific programs remains to be seen, but as Morrell said, the credit unions will try to work with members as closely as possible to meet their individual needs.
“I think the main message, from our perspective, is ‘We’re here,’” Morrell said. “We want to work with our members, and we want to help them be proactive in thinking through their household financial scenario as it may be impacted by this particular situation.”
Questions or comments? Contact Matt Halvorson, Anthem Editor: email@example.com.