Shutdown meltdown

Effects of government gridlock for Austinites

Charles Taylor, Staff Writer

Calling social workers for help with bills. Researching medication insurance. Over 800,000 federal employees, including many Austinites, were furloughed in the longest government shutdown in American history, and employees at all levels of government suffered.

“I felt bad for a lot of them, because I work with these people,” Austin-area tax examiner technician Lea Sampo said. “A lot of them were like, ‘I’m barely making it through this.’”

The shutdown began at midnight on Dec. 22, 2018, when President Donald Trump and the U.S. Congress couldn’t agree on an appropriations bill to fund the federal government in 2019, and continued until Jan. 25 when a temporary stop-gap was signed, keeping the government open until Feb. 15. It stemmed from an argument over $5.7 billion for Trump’s planned border wall. The shutting down of agencies such as the Food and Drug Administration (FDA), Internal Revenue Service (IRS) and United States Department of Agriculture (USDA) had negative effects on taxpayers, homebuyers and government workers in the Austin area.

Although citizens were worried about the health effects associated with a shutdown of the FDA, according to City of Austin Public Health Department director Stephanie Hayden, the shutdown of the FDA has not directly impacted food inspection in Austin.

“The department receives a federal grant,” Hayden said. “We receive about $22 million in federal grants for close to about a third of the department’s budget, and so that funding funds about 47 percent of the department, so that’s a little over 200 people that those funds cover, and so right now with the shutdown because we have some reserve funding, we are not directly impacted right now.”

While the department isn’t directly impacted, this use of reserve funds has had an impact on other departments. According to Hayden, the shutdown led to an increase in employees of other agencies requesting help.

“What happens is that we have some folks that have started to call our social workers because people are starting to struggle to be able to pay their bills,” Hayden said. “So that’s the impact that we’re seeing right now is connecting people to resources that will help them to pay their bills…Where we’re seeing the impact is in citizens that live in this community in Travis County that work for the federal government; they’re reaching out to get assistance.”

The IRS shutdown impacted the Austin mortgage industry. According to Michael Robertson, branch manager and loan officer at Vista Lending, the unavailability of tax transcripts from the IRS had an impact on homebuyers’ ability to buy houses.

“The IRS was no longer going to process tax transcripts, which is part of our underwriting process,” Robertson said. “So when we in the mortgage industry go to prove a loan, one of the requirements is not only to get a tax return from the customer, but we also need to get tax transcripts from the IRS as a fraud protection tool. …What we saw was a lot of delayed closings, meaning you couldn’t buy the house because we could not get that. Now what we have done at our company is we have elected to go ahead and start closing certain types of loans without the tax transcripts in hopes that they match. …We don’t know 100 percent of the impact because we, the lender, we’re taking a risk.”

Robertson said the shutdown of the USDA also had an impact on the mortgage industry. According to Robertson, loans in rural areas could not be closed.

“The other issue is the USDA loan product — and this is a loan that is really a low down payment loan for rural America, you know like outside of the city limits, outside of the suburbs — those loans cannot close,” Robertson said. “Due to the government shutdown, we cannot close those loans at all until the government opens back up. So that housing market is completely shut down … company-wide, this has become a pretty significant problem of delaying these loans, for closing, you know, people wanting to get in a house, sellers wanting to sell the house; all of a sudden, because of the government shutdown, we can’t do it.”

The shutdown of the IRS had major effects on its employees and taxpayers around the nation. According to Sampo, the shutdown has negatively impacted IRS employees, including some of Sampo’s co-workers.

“I’ve seen some people struggle,” Sampo said. “A lot of my co-workers, first day, came back and were saying, ‘Hey this place is having free food. This place is doing this.’ I know some of them were talking about, ‘Oh, these insurance companies or these drug companies will actually pick up the bill for you if you need medication.’… Different places were delaying their payment till after people got paid. So watching the co-workers who did have to deal with that is kind of hard.”

Sampo said the shutdown left many furloughed employees unwilling to spend money because of a distrust in the government.

“You have 800,000 employees going, ‘I don’t trust you to not shut down again, so I’m not gonna spend money for this long,’” she said. “You have all of these government employees who are going, ‘I don’t trust you to keep open so I’m not going to spend money that you’re going to give me for these three weeks just for you to close again.’… Nobody is spending money. Nobody’s really willing to right now with our paychecks being as uncertain as they are.”