Friday, April 08, 2011


How would a federal shutdown affect tourism-dependent Hawaii?

by Larry Geller

MoneyOf course, failure of the feds to reach a budget agreement today would result in loss of federal salaries in Hawaii, and if prolonged, that would affect tax collections.

Perhaps the largest impact of a long-term shutdown could be on state programs or salaries that are partially funded by the federal government. Presumably the salaries would continue to be paid but the federal money would not come. Similarly, programs such as TANF and food stamps that require a federal drawdown may be impacted.

Federal contractors would not be paid, likely including those that supply the military bases in Hawaii.

Closure of federally-run national parks could impact tourism and reduce tax receipts. It’s not clear if the roads in national parks would remain open The volcano on the Big Island is a perennial draw, and it is in a national park. .So is the U S S Arizona Memorial. Here’s a googled list:

Ala Kahakai National Historic Trail
the Island of Hawaii, HI National Historic Trail
Haleakala National Park
Kula, Maui, HI National Park
Hawaii Volcanoes National Park
Hilo, HI National Park
Kalaupapa National Historical Park
Kalaupapa, HI National Historical Park
Kaloko-Honokohau National Historical Park
Kailua-Kona, HI National Historical Park
Pu`uhonua O Honaunau National Historical Park
Honaunau, HI National Historical Park
Puukohola Heiau National Historic Site
Kawaihae, HI National Historic Site
U S S Arizona Memorial

Anyone who works in the parks could be furloughed, resulting of course in loss of personal income, but also loss of taxes on that income and taxes on the businesses they support.

None-emergency passports and visa will not be issued, which certainly could affect tourism should the shutdown be prolonged. There would be an impact on hotels and a decrease in the taxes that tourists pay.

If military pay is delayed, there would be an impact on military families in Hawaii, and again, loss of tax revenue on anything they would normally spend.

SBA loans will not be made or processed, perhaps with a slight impact in Hawaii.

There would certainly be other impacts, for example should the federal court cancel or delay activities, but those may not have clear economic consequences for the state.

The loss of taxes normally paid by federal workers may be permanent:

Section 1341 of Title 31 of the U.S. Code prohibits federal and D.C. government workers from spending or obligating funds that have not already been appropriated by Congress.

[AFGE, Requiring employees to work during shutdown violates law, lawsuit charges, 4/8/2011

In other words, even those federal workers who may continue to work may not receive back pay, should the lawsuit succeed.

This work is licensed under a Creative Commons license.


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