Federal deadlock could damage LI economy

A federal government shutdown, while serious, would create fewer problems for Long Island's economy than in some other parts of the country, according to businesses and experts.

But a federal spending deadlock that continued beyond a few weeks could do real damage. Without a compromise in Congress, the federal government will shut down this week.

Federal contracts with companies, organizations and local governments in the five Congressional districts on Long Island and part of New York City total $554.4 million for the fiscal year ending Sept. 30, according to the government.

"Defense contractors in the district have called me to express concerns about disruptions in contracts," said Rep. Steve Israel (D-Dix Hills).

A short shutdown won't necessarily impact companies with long-term contracts, though payments could be delayed.

Commack-based Bren-Tronics has federal contracts in fiscal 2011 for $1.5 million, primarily to provide specialized battery systems to the Department of Defense, according to usaspending.gov.

"I've been doing this for 38 years and they've shut down quite a few times and it really hasn't affected me," said company chairman and chief executive Leo Brenna. "We sort of ride our way through it."

If a shutdown went beyond a few weeks, he said he'd start to worry. "Getting paid is important," he said. "If they don't pay me I can't pay my employees."

Samuel Aronson, director of the Brookhaven National Laboratory, said the impact would depend on the shutdown's length. "We'll be allowed to continue to operate and have enough funds to go for a while," he said. "If it were to go on for months . . . we would just run out of money and have to curtail operations eventually."

The federal government shut down twice -- for five days and 21 days -- in fiscal 1996 when President Bill Clinton and the Republican majority in Congress could not agree on spending and did not enact stopgap measures.

Nonessential federal workers would be furloughed, but Nassau and Suffolk's 17,700 federal workers made up 1.5 percent of the nonfarm workforce in February compared to 2.3 percent nationally, according to the Bureau of Labor Statistics.

"The biggest impact is going to be in areas that have large concentrations of federal employment," said Gus Faucher, a director at Moody's Analytics. Furloughed federal workers would have more impact in areas like Washington, D.C., or places with national parks.

"If this goes on," he cautioned, "and people are feeling that government doesn't have a handle on things, that it's incompetent, that could hit consumer confidence, it could hit stock prices . . . That's where you're going to see an impact on Long Island."