At Felton’s Doctor Auto repair shop, Teena Flacco is wondering if and when her customers who work for the government will be back. In Watsonville, Second Harvest Food Bank is bracing for a rush of CalFresh food assistance recipients whose budgets have been thrown off schedule. In Santa Cruz, businesses from restaurants to beauty salons are offering running tabs or free services to locals among the estimated 800,000 workers who went unpaid during a record 35-day federal government shutdown.
Ripple effects are still being felt countywide after President Donald Trump on Friday announced a temporary end to the shutdown that started on Dec. 22, following a budget impasse over his long-promised wall on the U.S.-Mexico border. Dozens of local federal employees have been directly impacted by missed or delayed paychecks, while many more are feeling the effects of altered federal benefits or lost business. Nationwide, reports from the Congressional Budget Office and S&P in recent days have put the cost of the shutdown at between $6-11 billion in lost productivity, some of which may be recouped if the government remains open after a looming Feb. 15 deadline for a longer-term funding deal.
Santa Cruz County is home to relatively small federal outposts for agencies including the National Oceanic and Atmospheric Administration (NOAA) and the U.S. Geological Survey (USGS). Other local residents or businesses rely on income or customers over the hill in Silicon Valley, where there are more federal contractors and research labs for agencies like NASA.
It was late last year when Flacco started to get nervous. Though she and her mechanic husband have steadily grown the Doctor Auto repair business they bought in Felton in 2009, Flacco—the bookkeeper and self-described “worrier” of the pair—was following news about a possible government shutdown. “Immediately I thought, ‘How can we prepare?’” she says.
Though rainy winters are rarely as busy as warmer months, Flacco says her fears materialized when customers dependent on federal income started cancelling appointments or putting off prospective work in December and January. As recently as Monday, the government reopening threw another wrench in the plans.
“We had a customer call out of their appointment today because they went back to work,” says Flacco, a friendly Santa Cruz native who wears a black t-shirt with Doctor Auto’s red, white and blue logo. “We missed out on a couple of really good jobs from over the hill.”
Testing the safety net
On Jan. 25, Trump signed a bill to fund the government through mid-February, after a dive in approval ratings and weeks of back-and-forth about the border wall projected to cost at least $15 billion. Though the President has floated the possibility of declaring a national security emergency to fund the wall, Trump has more recently said that he expects Congress to reach a deal on a wall or “steel barrier” to restore government operations longer term. Congressional Democratic leaders and an array of human rights groups say they still staunchly oppose a wall in any form, leaving open the possibility of another shutdown in the coming weeks.
While the political horse trading continues, Suzanne Willis of the county’s Second Harvest Food Bank says that the short-term deal to reopen the government was crucial.
Now that U.S. Department of Agriculture staff that oversee federal food distribution programs have returned to work, “We definitely have the food,” says Willis, who oversees development and marketing for Second Harvest. The food bank serves an average of 55,000 county residents per month, including many of the 25,000 low-income residents who receive CalFresh food assistance. Already, CalFresh recipients have seen budgets altered by an early allocation of January funds, potentially leaving a longer-than-average gap before the next disbursement now scheduled for March 1.
“We anticipate a significantly larger need in February,” Willis says. “We’re going to feel the effects of this for a long time.”
On social issues like food and housing assistance, the shutdown amplifies a trend toward heavier reliance on nonprofit groups for services once reliably provided by government. In August, an analysis by non-partisan think tank the Public Policy Institute of California reported that Santa Cruz County now has the second-highest poverty level in the state when factoring in high costs of living and reliance on safety net programs, with just shy of 24 percent of households living on less than $34,000 per year for a family of four.
So far, Santa Cruz has not seen the kind of expiring low-income housing contracts or missed rental assistance payments reported in other cities during the shutdown, says Jenny Panetta, executive director of the Housing Authority of the County of Santa Cruz.
“We’re here. We’re open for business,” Panetta said in late January, after monthly rent assistance was paid to landlords of some 4,500 local households that depend on the federal Housing Choice Voucher program, previously known as Section 8 and funded by the Department of Housing and Urban Development (HUD).
Though the Housing Authority was told HUD had enough cash on hand to pay for February rent assistance whether the shutdown ended or not, the future is more uncertain looking into March and beyond. “We expect they will continue to provide updates,” Panetta says.
Running a tab
Concerns about stunted local spending have been easy to see at businesses like Cafe LimeLight in downtown Santa Cruz, where a hand-written sign on the glass doors informed would-be customers in January that “federal workers may run tab during shutdown.”
At Evolve Beauty Lounge in Capitola, salon Owner Evelyn Durant and her fellow stylists started offering free haircuts for government workers with a valid federal ID in mid-January. A few days after posting the offer on social media, Durant said she had received half-a-dozen calls from workers or their spouses.
“This is one of the first things people stop doing,” Durant says. “It’s a luxury at that point.”
Keisha Frost, CEO of United Way of Santa Cruz County, said the nonprofit’s 2-1-1 service referral line saw calls triple on some days during the shutdown as callers inquired about unemployment assistance or other financial relief. Corporations like AT&T, Airbnb, Comcast and others also offered various payment deferrals or discounts to affected workers, Frost says.
For Flacco, the shutdown has meant making tough choices at the auto shop on Highway 9. While business is “abnormally slow,” she’s also concerned about potential delays for tax returns, permits and licenses currently pending with government agencies. Plans to expand the business and pursue her own car sales license—not to mention non-essential spending, like a rare planned family trip to Disneyland—have been shelved.
“I can’t trust where things are going,” Flacco says. “It’s very confusing.”
United Way of Santa Cruz County’s 2-1-1 hotline provides social service referrals 24/7. Call 211 or visit unitedwaysc.org. Second Harvest Food Bank’s community food hotline operates Monday-Friday, 8 a.m.-4 p.m. 662-0991, thefoodbank.org.