The Costs of Shutting Down

What happens to the state economy when the government shuts down? Minnesotans are finding out. The state government cut off most nonessential services on July 1, and unless Minnesota Republicans and Democrats overcome their recent budget impasse, the state economy will continue to suffer severe losses, some obvious and others more subtle.

22,000 state workers lost their jobs when the government shut down last week. That’s $23M in lost wages—and lost purchasing power.

Many working parents who rely on state-funded childcare programs are finding themselves out of luck. Economists project the cutoff in funding for childcare will force workers to take more days off and decrease employee productivity.

Haven’t paid your taxes? You may be in luck, as Minnesota’s Tax Compliance Office is closed during the shutdown. The state isn’t collecting its average of $52M a month from delinquent taxpayers.

Minnesota is losing an estimated $1.25M in revenue from the state lottery every day. It’s also losing $1M a month in visitors fees as long as state parks remain closed.

As the legislature refuses to close budget holes for school districts, local governments must find the money elsewhere—in some cases, through steep increases in property taxes.

Fitch’s has downgraded Minnesota’s credit rating, raising doubts about the state’s willingness and ability to pay its bills. That means higher interest rates on state bonds, likely to cost taxpayers untold amounts even after the shutdown ends.

With their liquor licenses set to expire, many Minnesota restaurants—which rely heavily on profits from the bar—are considering closing their doors altogether. And it’s a bad beat for workers, too: If you were out of a job for the foreseeable future, wouldn’t you want a drink?

Robert Petito contributed to this report.