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Budget cuts and the potential loss of 925 jobs at Sandia National Laboratories could create larger problems for Albuquerque's budding technology economy, said Gary Tonjes, president of Albuquerque Economic Development.

On Wednesday, Sandia President Tom Hunter and Vice President Joan Woodard sent a memo to all lab employees warning that cuts proposed by President Bush could reduce the labs' operating budget by $180 million.

The budget cuts could lead to a reduction of 625 Sandia full-time positions and a loss of about 300 contractor jobs to the labs' New Mexico and California sites, the memo said.

"In addition, this could result in the direct loss of approximately $75 (million)-$90 million in other essential products and services," the memo said.

That includes cuts in procurements and cancellation of construction projects in New Mexico, it said.

The budget proposal has yet to be approved by Congress, which could restore some or all the proposed cuts.

Los Alamos National Laboratory also faces cutbacks of about $500 million, which could create even deeper problems for the state, some say.

"This is about as serious a problem as we've seen, and it has the potential for affecting all New Mexico," Sen. Pete Domenici, an Albuquerque Republican, said of cuts to both labs in an interview last week with KRSN-AM (1490) in Los Alamos.

Locally, if Sandia's budget cuts remain in the funding bill, Albuquerque may have a hard time absorbing the cutbacks, Tonjes said.

"We've had some good growth in the private sector, but we've also recently had some private sector downsizing - from Intel to Cardinal Health - recently," Tonjes said.

Economic development groups like AED have been working to diversify the types of businesses in the area so job cutbacks are more easily absorbed by other companies.

But the labs still play a major role in both the state and city economy, and cutbacks - and loss of revenue for some companies - will undoubtedly cause hardships, Tonjes said.

"The laboratories have for many, many years provided some of the greatest employment opportunities and economic contributions to the area, and so any possibility of downsizing should be considered as potentially damaging," Tonjes said.

It's still early in the federal budget process, and more analysis must take place before the full impact of the reductions are understood, said Chris Miller, a Sandia spokesman.

"It's just so early in the process that there are bound to be changes from this first committee markup," Miller said.