California won’t take too much of a hit in the short term, but stands to lose a lot if the federal government shutdown lasts more than a brief time, according to the state Department of Finance.
Deputy Director H.D. Palmer said federal funds for unemployment insurance benefits, MediCal, and supplemental security income/state supplementary payment grants for the elderly, blind or disabled will continue uninterrupted.
But while there’s enough money to keep the Supplemental Nutrition Assistance Program – formerly called food stamps – afloat through October for the 1.9 million California households that rely on it, that funding will dry up in November. It’s the same scenario for school nutrition programs that serve 4.5 million meals per day mostly to low-income students. And money for the Women, Infants and Children nutrition program will last only through late November. (I’d link to the SNAP and WIC programs, but the shutdown already has affected their web pages.)
“The longer this goes on, the greater uncertainty there will be for funding some of these programs,” Palmer said Tuesday.
Meanwhile, California – home to more federal employees than Washington, D.C., – will see a lot of government workers not drawing paychecks, and thus unable to spend their money in their communities or pay their bills. Communities near national parks such as Yosemite will suffer even more while those parks are shuttered, cutting off the tourist flow.
But the worst of it come if Congress refuses to raise the nation’s debt ceiling by Oct. 17 and the nation defaults on its debt, Palmer said. The resulting financial market instability could decimate the capital gains and stock options on which California depends for a huge chunk of its tax revenue, he said, blowing a big, red hole in a state budget that only recently was brought back into the black.