Shutdown Creates Uncertainty in County Businesses, Bond Market

The continued federal government shutdown is creating extended disruption in Maryland county economies, moving beyond the impact of income tax revenue from furloughed workers, into the consulting and services industries, and the bond market.

As reported in the Baltimore Sun, those who provide construction and food services for the federal government and its workers are experiencing disruption and losses as a result of the shutdown.  The article describes how furloughs are closures halt contracts and deprive local businesses of a customer base.   According to the Sun,

The federal government intertwines with Maryland businesses in many ways, which means many Maryland businesses feel the pinch when the D.C. machinery comes to a halt. President Barack Obama chose a Rockville construction firm as the backdrop for his speech Thursday about the shutdown’s economic effects.

At least 100 federal workers usually crowd the Salsa Grill in Woodlawn for lunch. By Friday, the fourth day of the partial federal government shutdown, their numbers dwindled to three. The Peruvian eatery — across from the Social Security Administration and near the Centers for Medicare & Medicaid Services — counts on those agencies for about half its customers. “The restaurant business, it’s small margins, and this is not going to help me at all,” said Jay Angle, the owner and chef. “I’d love them to go back to work.”

For more information, see the full story from the Sun.

As reported by the Gazette, one Montgomery County’s largest employers, the defense consulting firm, Lockheed Martin is planning to furlough its employees due to the shutdown.

The federal government shutdown is affecting one of Montgomery County’s largest employers, Bethesda defense giant Lockheed Martin, which announced Friday that it would furlough about 3,000 employees companywide on Monday because of the political standoff.

The furloughs at Lockheed — which has about 5,000 employees in Montgomery County — include employees who cannot work because a government facility where they work is closed. It also covers employees whose duties require a government inspection that cannot be completed or whose worksite has received a stop order.

For more information, see the full story from the Gazette.

The federal government shutdown could also affect Build America Bonds subsidy payments.  As described by the National Association of Counties (NACo), the shortage of IRS staff creates uncertainty,

As the government shutdown continued this week, its impact on the bond market has yet to be fully realized, but there is cause for concern for entities (especially counties) who have issued Build America Bonds (BABs). The Internal Revenue Service (IRS) has not issued official guidance on how BABs subsidy payments should be handled, but given that 90 percent of the IRS staff is furloughed, and to the extent that subsidy payments are treated as tax refunds, payments to BABs issuers will likely be suspended during the shutdown.

For more information, see the National Association of Counties post.