DEVELOPING STORY — Federal Shutdown Could Have “Severe Impact” on N. Virginia

On a conference call today, Rep. Jim Moran (D) said he believe the odds of a federal shutdown at the end of the week is about 50/50 — a dark omen for Arlington and other Northern Virginia jurisdictions whose economies rely heavily on federal employment.

If such a shutdown were to happen, Moran says he believes that furloughed federal employees would not be reimbursed for their time off due to Republican opposition to such a move. A shutdown could last several weeks and have a “severe impact” on the local economy, Moran warned.

“This is very, very, serious,” Moran said. “Federal employees need to understand that this is not 1995, when we closed down… and [employees] were fully reimbursed.”

“About a million federal employees will not be working, and it is highly unlikely they will ever be reimbursed,” Moran continued. “Not only is this going to hurt the overall economy in the metropolitan Washington area that I represent, but it is going to have a very severe impact on employee’s abilities to make their mortgage payments, their car payments, etc.”

“Every private sector element in my district’s economy is going to be adversely affected,” Moran added.

Others on the conference call pegged the number of federal employees who would be furloughed during a shut down at around 800,000 nationwide, including Department of Defense civilians. Moran said the impact would likely to extend to government contractors.

“If this continues I think there’s going to be a number of smaller contractors that will simply go out of business because the [federal agencies] aren’t giving them the kind of cash flow they need to survive,” he said. Backing up that suggestion, Moran’s office pointed out that 20 percent of government contracts in the D.C. area were adversely affected during the 1995 shutdown.

For Arlington, the impact could be especially severe. There are just over 60,000 federal jobs based in Arlington, according to figures provided by the county’s economic development office earlier this year. And that’s not including the number of Arlington residents who work for federal agencies outside the county. Based on past census data, the number of federal employees living in Arlington is likely around 26,000.

Despite the ominous warnings, Karen Vasquez, spokeswoman for Arlington Economic Development, said the lasting effects of a shutdown on the local economy would be relatively mild.

“Certainly there’s impact, there’s no question,” she said. “But I think we saw last time around that there were no major lasting effects. Although it does prove to be a hardship in a variety of capacities, the economy is able to right itself again. Especially in a location like Arlington where — while certainly we are very dependent on the federal government, we are not wholly dependent on the federal government.”

“We do have a fairly diversified economy,” Vasquez said. “I think people and their businesses should be fine, even if there is a shutdown.”

Moran said a shutdown could be avoided if Democrats and Republicans come together to pass a “clean” bill that continues funding the federal government at current levels. He said the odds of that happening, in his view, are about 50 percent. Once a new federal government is passed, however, there could be more pain for the region.

Moran said the current Republican budget proposal would freeze federal pay for five years, cut the federal workforce by 10 percent and require increased retirement contributions from federal employees. The long-term impact of such cuts would likely ripple through the local economy.

On Thursday Moran will hold an “emergency town hall meeting” to discuss the proposed federal shutdown. The meeting will be held at Francis Hammond Middle School (4646 Seminary Road) in Alexandria from 7:30 p.m. to 9:00 p.m.