VIRGINIA BEACH -- Economists are predicting the government shutdown will hurt small contracting businesses more than large ones.
Norfolk city council member and nursery owner Barclay Winn has a contract to plant hundreds of trees, shrubs and 20,000 flower bulbs at Langley Air Force Base Hospital. Because of the shutdown, he can't get a pass to get on base. He is hoping the shutdown ends soon, so his plants can make it into the ground before it's too late.
“Small to medium size government contractors will feel the pain pretty immediately,” Tidewater Community College Professor of Business Management and Administration Peter Mark Shaw said.
Shaw explained that smaller government contractors do not usually have enough cash reserves to survive a long shutdown.
“By contract they have to fulfill the work, but their payments will be deferred. They are watching their cash flow. There might come a point where they run out of money and can’t finish work for the government.”
Keith Friedman, chairman of Hampton Roads Tea Party said the shutdown will cause a ripple effect in the economy.
“If you own a dry cleaning business, you won’t have government contractors getting their suits cleaned,” Friedman said.
If contracts are delayed because of a lack of funding Shaw says it would cost the government more money in the long run.
Shaw believes larger contracting businesses will be able to make it through the shutdown.
“The fortune 500 companies like General Dynamics can go for quite a while,” Shaw said.
Shaw doesn’t think the shutdown will last long, but he is concerned about furloughed workers cutting back on spending.
“If you have less spending, then you’ll have less tax revenue to pay for schools, police and other city services,” Shaw said.