Tag: Government Shutdown

National parks could face impact of possible federal shutdown

Arizona and Utah will keep iconic national parks in those states open if a shutdown of the federal government threatens access to Arizona’s orange-striped Grand Canyon and the sheer red cliffs of Utah’s Zion Valley.

Most importantly for state budgets, visitors can keep spending their money near the parks.

A cutoff could come Sunday. The economic impact of the national parks is so important that Arizona’s Democratic governor and Utah’s Republican governor have decided to invest state funds in keeping Grand Canyon, Zion, Arches, Bryce Canyon, Capitol Reef and Canyonlands national parks open.

Maintaining money streams  

For Arizona Gov. Katie Hobbs and Utah Gov. Spencer Cox, it’s a simple question of economics.

The nonprofit National Parks Conservation Association says that every $1 invested in the National Park Service annually supports more than $15 in economic activity.

The association says that every day of a shutdown could mean national parks collectively losing nearly 1 million visitors, and gateway communities losing as much as $70 million.

Hobbs and Cox say their states will pay to keep those parks operating on a basic level, cushioning tourism-dependent communities.

“We expect to be reimbursed, just as federal employees receive back pay during a shutdown, and we have communicated this to the Department of Interior,” Cox said this week.

Hobbs has said Arizona Lottery funds would help keep the Grand Canyon park open.

Utah paid about $7,500 daily during the last part of December 2018 to keep Zion, Bryce Canyon and Arches running during a shutdown back then. The nonprofit Zion Forever Project committed $16,000 to pay a skeleton crew and keep bathrooms and the visitor center open at Zion, which continued drawing several thousand visitors daily.

Downsides to keeping parks open   

The National Parks Conservation Association noted that keeping parks open during a shutdown without sufficient staff and other resources can be disastrous.

“We witnessed unnecessary and avoidable damage, including overflowing trash and human waste, vandalism, looting and illegal use of off-road vehicles,” the organization said about some sites during the 2018-2019 shutdown.

Conditions at Joshua Tree National Park in California were described as especially bad, with overflowing trash and portable toilets and unsupervised visitors driving off-road and toppling incalculable numbers of the distinctive plants.

Sen. John Barrasso, a Republican representing Wyoming, on Thursday urged Interior Secretary Deb Haaland to keep the parks open with previously collected fees. The decision by Trump administration officials to use such fees to keep some parks open five years ago has been lambasted as illegal by the Government Accountability Office, the congressional watchdog.

The Interior Department and the National Park Service it oversees have not released a contingency plan for a probable shutdown.

“As secretary of the Interior, it is your responsibility to provide opportunities for people to access our parks in a way that ensures visitor health and safety, as well as providing the same opportunity for future generations,” wrote Barrasso, ranking member of the Senate Committee on Energy and Natural Resources.

Arizona paid about $64,000 a week during the shutdown that stretched 35 days from late 2018 to early 2019 to cover restroom cleaning, trash removal and snow plowing at the Grand Canyon park. People with permits to hike in the backcountry or raft on the Colorado River could still go, but no new permits were issued during that period.

National park employees who were not furloughed had to work without pay, their lost wages repaid after a budget resolution was reached.

Those expected to work in another potential shutdown include members of Grand Canyon National Park’s emergency services, which has teams trained in medical services, search and rescue and firefighting to protect not only visitors but about 2,500 park workers, concession employees and others who live on park property.

Joëlle Baird, the park’s public affairs specialist, said Arizona state funding “kept most everything business as usual” during the shutdown five years ago. She said hotels and restaurants remained open.

John Garder, senior director of Budget & Appropriations for the nonprofit National Parks Conservation Association, said funding the parks is a federal responsibility that states shouldn’t have to assume.

“We understand states’ interest in opening our parks when the government shuts down as they are proven economic engines, generating more than $50.3 billion and supporting more than 378,400 jobs annually,” Garder said. “But ultimately, it is Congress’ responsibility to keep them funded and open.”

The association said the shutdown could affect more than 400 sites in 50 states, the District of Columbia, and U.S. territories such as Puerto Rico, Guam and American Samoa.

Other states might keep their national parks operational as well  

In South Dakota, Gov. Kristi Noem was reviewing a shutdown’s possible impact on national parks, including Mount Rushmore, which Noem spokesperson Ian Fury called “the heart of South Dakota’s tourism industry.”

Colorado Gov. Jared Polis issued an executive order Thursday directing the state’s Department of Natural Resources to develop a plan for continued operations and resource protection of Colorado’s national parks. Rocky Mountain and the state’s other three national parks contributed $804 million to the local economy last year.

In Washington state, home to Mount Rainier and Olympic national parks, Gov. Jay Inslee has no plans to provide more funding or staff to national parks if there’s a shutdown. Inslee’s staff said much of governor’s discretionary spending was needed this year for cleanup and recovery after wildfires in Spokane County.

Montana Gov. Greg Gianforte’s office didn’t say if the state would spend money to keep Glacier or Yellowstone national parks open. But his staff said the Republican governor’s budget team is working with state agencies “to prepare for a possible shutdown in the event Congress can’t get its act together.”

Most of Yellowstone is in Wyoming, but three of the five entrances are in Montana.

Wyoming Gov. Mark Gordon is awaiting more information from Interior and White House officials to better understand the state’s options, spokesperson Michael Pearlman said.

Pearlman said the Republican governor was also in contact with officials at Grand Teton and Yellowstone national parks, recognizing that closures “could have significant economic repercussions to Wyoming families that live and work in our gateway communities.”

Democratic California Gov. Gavin Newsom’s administration said this week it doesn’t plan to keep national parks open if the federal government shuts down, saying they are not within state jurisdiction and the state has had to make difficult budgetary decisions this year.

The U.S.’ credit worthiness is one of its most prized fiscal assets, with global investors relying on the guarantee that the nation can make good on its debts. But now, a leading credit agencies is warning that a possible federal government shutdown this week could tarnish the country’s gold-plated rating.

Time is running out for for House Speaker Kevin McCarthy to find a compromise to keep government agencies running and to avoid a shutdown on October 1, the first day of the new fiscal year. If McCarthy and other Republicans are unable to find a solution, funding would expire on September 30 and many agencies would be forced to halt some of their operations. Hundreds of thousands of federal workers also wouldn’t draw a paycheck until the crisis is resolved.

With Congress divided between a Democratic-controlled Senate and Republican-led House — and with some far-right conservatives looking to use the shutdown as leverage to force government spending cuts — many are bracing for a stoppage that could last weeks. While the actual economic impact of a shutdown is likely to be reversed once the government reopens, the damage could be longer-lasting for other reasons, Moody’s Investors Service said Monday in a report. 

“A shutdown would be credit negative” for the U.S. debt, while “A shutdown “would underscore the weakness of U.S. institutional and governance strength relative to other Aaa-rated sovereigns that we have highlighted in recent years,”  Moody’s analysts wrote.

The credit rating firm added, “In particular, it would demonstrate the significant constraints that intensifying political polarization put on fiscal policymaking at a time of declining fiscal strength, driven by widening fiscal deficits and deteriorating debt affordability.”

Moody’s didn’t change its Aaa rating on U.S. debt, but cautioned that the nation’s “lack of an institutional focus on medium-term fiscal planning …  is fundamentally different from what is seen in most other Aaa-rated peers, for instance historically in Germany (Aaa stable) and Canada (Aaa stable).”

No longer AAA

The warning comes roughly two months after Fitch Ratings, another major credit ratings agency, downgraded U.S. credit from the highest rating, citing the nation’s rising debt and eroding political stability. In that case, the firm lowered the nation’s rating to AA+, from its previous AAA level. 

Fitch cited the country’s “repeated debt-limit political standoffs and last-minute resolutions” as weakening investors’ faith in U.S. fiscal management. 

Like Fitch, Moody’s also cited the nation’s ballooning debt as a pressing issue, partly because it requires higher costs to service the debt, resulting in less fiscal flexibility. Meanwhile, political infighting could create “extremely difficult” conditions for creating a plan to reverse widening fiscal deficits by either increasing federal revenue or cutting entitlement spending, it warned. 

“In the absence of significant fiscal policy measures, we expect debt affordability to deteriorate at a much faster pace, with federal interest payments relative to revenue and GDP rising to around 27% and 4.6%, respectively, by 2033, from 9.7% and 1.9% in 2022, driven by materially higher interest rates and relatively weak revenue,” Moody’s said.

Costs of a government shutdown

Despite such concerns, the economic effects of a government shutdown itself is likely to be short, with the impact most heavily felt in industries and geographical areas with a high concentration of federal workers, such as Washington, D.C., Moody’s noted. 

“Some defense contractors and municipal issuers, including mass transit systems, and certain municipal housing sector bonds that rely on annual federal appropriations could be affected,” Moody’s, led by analyst William Foster, said in the report. “Mass transit authorities, already grappling with lower post-ridership and the looming expiration of pandemic relief funds, may face further challenges due to potential delays in federal grants.”

Even so, a shutdown would occur just as millions of American workers are set to face another economic challenge with the resumption of student debt repayments in October. 

Furloughed government workers “will not receive pay until the shutdown ends,” noted High Frequency Economics in a research report. “They are likely to step back from spending, at least temporarily.”