The announcement was made at city council on Tuesday night.
If the sequester isn't squashed by September, officials say they will freeze all new positions and "suck up the work load for as long as they can." They will also freeze all unneeded training and trips. They say this would save about $5 million.
"We can do nothing, or we can do something about it," said mayor William Sessoms. "As a city, and as a region we are dependent on defense spending for far too long."
On Tuesday afternoon, city council and the mayor got the doomsday scenario for how bad it could get.
"The shame is we didn't have to be here but we are here, and we have to deal with it," said city councilman Bob Dyer.
The City Council will propose a new budget initially as if sequestration will be resolved. By September, they say really deep cuts and changes will happen.
By late December if sequestration isn't resolved,city employees will be furloughed 3 days and layoffs could follow.
They say Beach Human Services is set to lose $440,000. The city manager's office is not sure how many families that will impact.
Baykahm Phoutasen runs a restaurant by the courthouse and she knows furloughs would make her bottom line come up short.
"I'm trying to think how am I going to pay them if I don't get the same clientele," says Phoutasen.