Federal Shutdown, Local Letdown

Federal government issues could affect local economy

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    NEWSLETTERS

    TK
    Shutterstock

    Federal government workers make up a large percentage of the population (and traffic) in the Washington region.

    So what would happen in the DMV area if a temporary government funding isn't passed by next Friday and the federal government is forced to shut down?

    To sum it up: There will be a lot less traffic on area roads. (Good!) Metro will be less crowded. (Sorta good!) Smithsonian museums will become ghost towns. (Bad!) And a lot of people will be out of a lot of money. (Really bad!)

    Impending Federal Shutdown's Impact on DC Businesses

    [DC] Impending Federal Shutdown's Impact on DC Businesses
    The Board of Trade says a federal shutdown could cost the region tens of millions of dollars every day.

    Oh, and it has local officials worried. (Gulp!)

    "This is a very big concern, and it seems more likely every day," said Jim Dinegar, president of the Greater Washington Board of Trade.

    For those who don't remember what happened the last time the Feds shut down in 1995-96, nine million visitors were turned away from museums and monuments as 368 national parks closed, according to National Journal, which is including a handy "Shutdown Timer" on its website.

    If it happens again, you'll see our locally beloved Smithsonian museums and the National Zoo close. And that would be sad -- not just because we wouldn't be able to get our daily panda fix.

    That would also mean fewer tourists coming to the area. That, in turn, would mean less business for area hotels, bars and restaurants. And the trickle-down would continue from there.

    Last time around, the shutdown happened during the winter. With no museums open, people didn't want to visit area outdoor attractions in the cold.

    "It was well-known that the museums ... the inside attractions were closed," Dinegar recalled. "This time around, we will be very clear that there will be plenty of outside attractions to see."

    This time it could happen in the spring when Washington's busy tourist season begins. That includes events like the National Cherry Blossom Festival -- which has federal ties. The National Park Service, which handles most of the event, would be closed if there's a federal shutdown.

    Of course, the lack of tourists and federal workers could make for less traffic on area roads and fewer people packing Metro trains. Locals may see that as a good thing. But Dinegar reminds us that Metro needs the money from those commuters to pay the bills.

    And unless Congress appropriates operating funds for the District, local issues could also arise. In 1995-95, the city only allowed "essential" employees to continue working, and that included police and firefighters and allowed public schools, courts and hospitals to remain open, according to the Washington Post.

    D.C. Delegate Eleanor Holmes Norton said she's working with the Feds to make sure D.C. government doesn't have to shut down.

    "Because the District does not yet have budget autonomy, Congress technically appropriates to the District its own local taxpayer-raised funds, and the District is only allowed to spend such funds until the current continuing resolution expires on March 4," she said in a statement. "We have been in contact with the Obama administration, House and Senate leadership, and Mayor Gray to ensure that a federal government shutdown does not force a local government to close, even temporarily.”

    D.C. shutdown or not, Dinegar believes this potential stoppage could have a deeper impact on local businesses than the last government shutdown in 1995-96.

    "You'll have a lot of people who won't get paid, so that's a lot of disposable income and more," Dinegar said. "That's going to make things tighter in a very difficult time already."

    Dinegar said experts don't know how much money would be lost, but he said it was "substantial" back in 1995-96. And now: "There are more contractors than there were back then. There are more people in this region. In fact, the federal workforce, while it may be about the same size, there's a lot more work being done by the private sector."

    In the last shutdown, Dinegar said the federal workforce was paid retroactively, but the contractors were not. This time around, Dinegar believes even the federal workforce won't be paid retroactively because the whole discussion is about deficit reduction.

    Some businesses would feel the effect immediately, like hotels and restaurants.

    "The smaller businesses would feel it first, and they'll feel it in a harsher way than the bigger businesses," Dinegar said.

    Contractors would feel it immediately, as well. Dinegar said that since they won't be paid, that would then trickle down to the clothing stores, home improvement companies, and to those businesses that thrive on disposable income.

    Long-term effects? Dinegar said there could be a backlog for passports, Social Security, grants and contracts. That work will pile up on desks and would need to be addressed once the government opens up again.

    There are also tax implications for the District and all the surrounding jurisdictions.

    "That's also at a time when the state and local budgets need more money and not less," Dinegar said.

    The BOT will hold a free conference March 1 to teach businesses how to survive a potential shutdown.

    "It's better to prepare right now, and if we don't need it, that's fine," Dinegar said. "But if we are prepared and it does come to pass -- which seems very likely either in early March or two weeks later -- I want to make sure that the businesses are prepared to weather this during a very difficult economic time.