By Jamison Cocklin
As the U.S. government shutdown enters its 10th day today, its effects on the Mahoning Valley economy continue.
Economic-development grants, small-business loans and workforce services have been halted or curtailed as the stalemate in Washington continues with no end in sight.
“If this goes on and on, we would run out of cash,” said Bert Cene, director of the Mahoning-Columbiana Training Association, which provides free employment-related services to job seekers and employers. “We’re doing what we can to save, but this is impacting service to our new customers. We can’t make funding obligations for them.”
The MCTA, which also runs the area’s One-Stop career service center, receives a large part of its funding through the Federal Workforce Investment Act. Cene said his organization can’t draw from the $1.4 million it was allocated for this fiscal year, which began Oct. 1, as a result of the shutdown.
The agency is running on carry-over and other emergency funds and it is serving job seekers, but some new customers who have been on a waiting list for months can’t take advantage of money the MCTA distributes among low-income adults and displaced workers for education.
Cene said his organization is not alone; 19 others across the state and hundreds across the country have been similarly affected.
At the Ohio Small Business Development Center in Youngstown, business consultant Bill Oliver said clients waiting for loans guaranteed by the U.S. Small Business Administration to be processed are out of luck. Those loans stopped when the government shut down, and as many as 1,000 loans could be delayed nationwide each week.
“For small businesses, SBA loan guarantees are critical,” Oliver said. “Banks aren’t exactly running around lending money. They’re much more committed with a government guarantee.”
Oliver wasn’t sure how many area small-business owners are affected, but he said the SBDC spends most of its time helping owners get financing for businesses.
The bulk of U.S. governmental operations were shuttered last week after lawmakers in the House and Senate failed to agree on a spending bill to fund government at the start of the new fiscal year.
Separately, Democrats and Republicans are also clashing as a deadline approaches for boosting the government’s $16.7 trillion borrowing limit.
Mike Van Buskirk, president and chief executive officer of the Ohio Bankers League, said the debt-ceiling fight is the primary concern for banks, businesses, financial markets and even consumers at the moment.
Next year, the Federal Reserve is expected to begin the transition for scaling back its $85-billion-a-month in bond purchases that have injected cash into the sluggish economy to boost growth.
Already, long-term interest rates have started rising in anticipation, but if the U.S. defaults on its debt obligations, Van Buskirk said interest rates could skyrocket, which would hurt lending at banks across the nation if borrowers can’t afford to take out new loans.
About 800,000 federal workers were sent home last week when the government shut down; some 350,000 have since been called back by the Defense Department.
According to the U.S. Bureau of Labor Statistics, Ohio had about 75,900 federal government workers in August. Of those, 22,600 worked for the Postal Service which was not affected by the shutdown.
“The fact is we’ve already seen enormous economic impacts with job growth below the national average for 14 months,” said Cleveland-based economist George Zeller. “The economy was already growing too slowly, and this is going to hurt us even more.”
The Ohio Department of Job and Family Services will delay the release of state and county unemployment numbers this month because it relies on a portion of data from the U.S. Department of Labor, which is shuttered. Zeller said that will make it difficult, at least temporarily, to determine the shutdown’s effect on local workforces.
At the Eastgate Regional Council of Governments in Youngstown, a $169,095 grant will be delayed indefinitely, said Patti Atwood, director of administration. Eastgate assists economic development projects in Mahoning, Trumbull and Ashtabula counties. Although such grants account for a small portion of the council’s budget, Atwood said some area projects could be delayed.
Other grants coming from the U.S. Economic Development Administration that were headed to cities like Youngstown will be delayed as well.
The Associated Press contributed to this story.