With garbage cans in national parks overflowing and national museum, monument, and historic home doors shuttered, the government shutdown is beginning to impact American lives. There are approximately 800,000 federal workers furloughed or working without paychecks since December 22. January rents, mortgage payments, and other bills are beginning to mount. Families are beginning to be concerned about essentials such as food, particularly in single earner homes or where both earners are federal employees. Some restaurants in the Washington DC area are even offering free food to federal workers. Some important guardians, such as the TSA, Coast Guard, and border patrol, are working without pay, which can add to their stress.
In areas where federal employment is a major employer, the impact of the shutdown is very real. For many who work far from the streets of DC who still receive mail and other services without interruption, the impact may not be felt much - yet. One might be able to postpone a trip to see the pandas at the National Zoo, but what about the following:
- Income taxes - Yes, tax season will soon be upon us. The IRS has not yet announced its start date for accepting 2018 returns (last year it was January 29). Will the IRS be able to accept returns and process refunds? Or, if the shutdown lingers, will there be a backlog? Will there be money to pay refunds? With the new tax regulations going into effect, this can be a confusing time for taxpayers as well and questions may need to be directed elsewhere. This is something that will matter to us - and pinch many households sharply as refunds are often used to reduce debt, make major purchases such as new cars, etc. You can still gather your documents and even prepare your returns or see your tax preparer to begin the process to avoid the rush.
- Food programs are largely funded through January. After that, the state and local programs may need to pick up the slack.
- Veterans programs are funded through fiscal 2019, these heroes are protected.
- Social security checks will still be paid to our seniors, as funding through fiscal 2019 is also set, which eases the blow of the shutdown for the elderly.
- Not for profit agencies which rely on federal grants may also feel a pinch in order to run their programs. This would be felt at the neighborhood level in many places where good work from these agencies is so dearly needed.
Hopefully, the impasse will clear up soon and the shutdown will be resolved. The House passed legislation to end the shutdown January 3, and it is now in the Senate. Even if the Senate passes the legislation, the President can still decide to veto it. A government system of “checks and balances” where many people’s “checks” are in limbo. The stressor of a shutdown is a potentially harsh reminder that increasing our personal savings in the New Year may not be a bad goal to work toward. We never know when the next challenge to our household income is coming.
We’ll keep our eyes on Washington and hopefully shortly after this is published, it will be moot.
The opinions are those of the author. Seek professional advice before taking any action in regard to your finances.
Todd A. Slingerland, CFP®
6 Tower Place Albany NY 12203
(518) 867-4000 x105 [email protected] www.capitalfinancialplanning.net