A Florida TaxWatch economic report
What the Government Shutdown & Debt Ceiling Crisis Mean to Florida
A budget impasse between the Democrats and Republicans in Washington has shut down the federal government since October 1, and has brought the nation to the brink of exceeding the statutory debt ceiling if the limit is not raised by October 17.
Everglades National Park usually hosts around 2,700 visitors per day in October, but is currently closed. [Photo: SFWMD]
Far from being simply a Washington problem, there are tangible impacts of the shutdown on Florida’s economy. Given Florida’s dependence on the sales and use tax (more than 70 percent of Florida’s general revenue), anything that decreases consumption affects Florida’s budget. The shutdown will likely cost Florida millions of dollars in tax receipts, as thousands of federal employees in Florida have been furloughed for almost two weeks. (See list below)
Several key Florida industries have already been hurt, including tourism, retail, and those sectors of the economy that require significant capital investment.
Particularly impacted when the federal government is shut down, Florida tourism has been strongly affected by the closing of national parks and museums, such as the Everglades National Park. In addition, small businesses that depend on visitors to the state’s parks have seen drops in income during this period, and some may go out of business because of it.
The shutdown also creates uncertainty for businesses and individuals, both of whom spend and invest less during periods of higher uncertainty. Adding to this uncertainty is the fact that there was no jobs report released on October 4th because of the shutdown, the release of which usually triggers market movement.
In addition to businesses delaying investments in productive capital and hiring workers, the shutdown of the IRS will likely delay some home purchases by individuals. This will hurt not only the buyers and sellers, but also mortgage lenders and banks, and will reduce the collection of Florida’s documentary stamp tax.