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The Government Shutdown’s Impact on Long Island

The effects of the government shutdown are being felt all over Long Island. For example, federal courts here remain open but bankruptcy cases face delays. All Long Island national parks, such as Fire Island National Seashore, remain closed. Other effects may be lesser known but no less impactful:  doctors and hospitals will continue to be paid but there will be no new Medicare/Medicaid enrollment. Those looking to get funds for Hurricane Sandy recovery will find that no new grants will be processed (previously approved funds remain available). There are no doubt dozens of other examples. 


The short-term effects of the shutdown are very real, yet bigger problems could occur if congress is unable to raise the government borrowing limit by October 17. Without that, the U.S. Treasury could default on its obligations causing Long Island's economy to take a major hit, as consumers might limit their discretionary spending including spending on vacations and restaurants which are two of our major areas of business.  In addition, the shutdown could impact the Long Island housing market as mortgagers may have difficulty verifying the social security and tax information of potential purchasers.  Finally, government contactors on Long Island, who are still reeling from sequestration cutbacks, would find that the government could fall behind in their payments to them, thereby limiting their ability to continue to perform under their contracts.  While struggling with a high mortgage foreclosure rate, Hurricane Sandy recovery, and employment woes, the shutdown is potentially a significant road block in the economic recovery of Long Island.

 

Eric Altstadter CPA is an Audit Partner with over 30 years of experience working with public companies and privately held businesses. He is the Editor-in-Charge of the firm's SEC Trends & Developments newsletter and a member of NY State Society of CPAs.

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