WASHINGTON - While the partial federal shutdown is hitting home for federal workers and contractors, Virginia Gov. Bob McDonnell says the ramifications on the commonwealth have not been as significant as he expected.
"Based on our analysis so far, the impact is relatively minor on Virginia, and we've clearly got the fiscal tools to deal with it," McDonnell tells WTOP.
"We anticipate it affects about 300 jobs in Virginia, which is far less than we expected. While we're a very defense-dependent state, when it comes to discretionary grants we actually rank 49th out of 50 in Virginia, so we've got ample contingency funds to weather the next week or two," McDonnell adds.
He says the recall of thousands of Defense Department civilian employees who were furloughed for the first days of the shutdown helps immensely. But there is still a worry about contractors who may face more problems, including the chance they will not receive pay for furlough days in the same way that government workers are expected to.
McDonnell expects the biggest financial impact to the state government will be less money taken in from sales taxes as people cut back, and less money heading to the state treasury from income tax withholding.
"We're expecting by the end of this month to see a slight downturn in sales and income tax revenue …we should know probably by mid-November how big that was," he says.
McDonnell expects the drop to be temporary, but he could not say at this point whether it will have any impact on state spending.
He says the "unprecedented uncertainty" created by the federal government over the last few years is the single biggest obstacle facing Virginia right now.
"We certainly hope that Congress and the president will get an agreement before the ultimate meltdown with the debt ceiling expiration on October 17."
McDonnell was in D.C. Tuesday to for a freight rail event.
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