- The Washington Times - Monday, September 30, 2013

Local governments across the region were planning to remain open, but they were expecting to feel the pinch of a federal shutdown on their wallets.

The loss of revenue from income taxes not collected from furloughed federal workers and from an expected decline in sales could equate to millions of dollars in the first week of a federal shutdown alone, local officials said.

In Montgomery County, where approximately 70,000 federal workers live, the primary effect was expected to come from a lack of collected income tax for time that workers might go unpaid.

“For each day they are not on the job costs us about $500,000,” said Patrick Lacefield, spokesman for Montgomery County Executive Isiah Leggett.


The estimates did not account for income taxes collected on wages paid by government contractors.

In Prince George’s County, a similar number of residents — 71,800 people — are employed by the federal government. But county officials there estimated that a loss in income tax would be lower, about $270,000 per day. The federal workers who live in the county bring home about $12 million daily in salary and wages that would be on hold during any work interruption.

Local governments on Monday were also having difficulty gauging the potential impact of a shutdown because it was not clear if workers would be reimbursed for lost wages.

Fairfax County officials could not provide a detailed estimate of potentially lost income but speculated that furloughed federal workers could tighten their purse strings and leave a decline in sales tax revenue.

“Will they stop buying things?” county spokeswoman Merni Fitzgerald said. “That will reduce our sales tax revenue.”

No local income tax is collected by the county, so officials were most worried about a drop in sales tax and a drain on local services in the event of a long-term shutdown.

In the District, which the office of the chief financial officer estimated is home to 210,000 federal workers, the city stands to lose between $1 million and $6 million per week in uncollected income and sales tax. Income tax would not be collected from about 76,000 federal workers who live in the city, spokesman David Umansky said.

But the city government was scheduled to stay open after Mayor Vincent C. Gray declared all of its more than 30,000 employees essential personnel.

The city stood to lose tourism dollars as museums and monuments on the Mall will be closed.

Around the region, economist Stephen Fuller said the most obvious effect of a shutdown would likely be felt first by businesses located near federal buildings.

“You’ll see some immediate effects at smaller businesses,” Mr. Fuller, director of George Mason University’s Center for Regional Analysis, said, describing how shops and restaurants would see decreased sales. “They might say ‘No one is at my lunch counter? I just won’t open up.’”

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