With its large number of federal employees and contractors, Maryland’s economy is being profoundly impacted by the ongoing government shutdown, according to a report released by the state’s Bureau of Revenue Estimates (BRE).
Approximately 172,000 Marylanders are currently impacted by the government closure, which began on Dec. 22, 2018. Each bi-weekly payroll for which these residents are not paid results in $778 million of lost wages, which translates to roughly $57.5 million less in combined state and local income tax withholding, and $2.1 million less in sales tax collections.
“These estimates demonstrate what we already knew — the unnecessary shutdown of our federal government is having a devastating effect on Maryland’s families and our state’s economic well-being,” said Maryland Comptroller Peter Franchot. “Even if some employees do eventually get repaid, our economy will not be made whole and changes to long-term spending habits may cause further harm.”
The uncertainty surrounding the shutdown — how long it will last and if it will happen again — will also likely reduce business investment, according to the Bureau of Revenue Estimates report.
Between 230,000 and 245,000 Marylanders are federal employees; since some agencies are funded through other budget appropriations, about 90,000 Marylanders are either furloughed or working without pay, according to the BRE report. It is estimated that roughly half of the state’s 164,000 federal contractors are impacted by the shutdown. Many of these workers are unlikely to be repaid once the government reopens, so state and local tax collections would suffer from their lost wages.
The full BRE report can be viewed here.
