U.S. Markets closed

How the Washington Impasse Slammed a Storybook Town

Rick Newman
The Exchange
Capt. Steve’s Bait and Tackle Shop in Chincoteague, VA.

At Capt. Steve’s Bait and Tackle in Chincoteague, Va., October is usually the month when the business turns profitable for the year. But not in 2013.

“Our business is down 90%,” says Jimmy Vasiliou, who owns the shop with his brother Peter and his father Tom. “You have to take money out of savings to get through times like this.”

It’s not a recession or a hurricane Vasiliou is trying to weather -- it's the shutdown of the federal government brought on by squabbling politicians in Washington. With members of Congress working toward a deal to end the shutdown, stock-market investors are expressing relief and most Americans seem eager to forget about the embarrassing episode. But in places like Chincoteague, and hundreds of other towns across America that are bearing an outsized share of the burden for the shutdown, the costs of the latest Washington fiasco may persist long after federal workers return to their jobs.

Chincoteague is a throwback water town made famous by the wild ponies that frolic in the wilderness nearby, which Marguerite Henry wrote about in the 1947 children’s book Misty of Chincoteague, later made into a movie. Tourists pump about $160 million per year into Chincoteague and the surrounding area, which is otherwise poor. The abundant wildlife and unspoiled waterscape are protected by the Chincoteague National Wildlife Refuge, which separates the town from the Atlantic Ocean, along with another federal preserve on Assateague Island to the north.

Chincoteague, VA (Photo: Cryptonaut via Flickr)

Those federal lands have become a curse, however, since the shutdown forced the government to padlock the parks, shut down beach access and close miles of nature trails, driving many tourists away. “It’s like the bottom fell out,” says Donna Mason, who, along with her husband Tommy, owns the Waterside Inn. “Everybody’s so frustrated. We’re all just pawns in the game.”

Unlike many East Coast shore towns, which get chilly by this time of year, Chincoteague usually remains lively in October. Temperatures typically reach into the 70s and 80s, ideal weather for birders, bikers, fishermen and weekend revelers. An oyster festival went off as planned earlier this month, but a reopening ceremony for the newly restored Assateague Lighthouse, which is 146 years old, was canceled on account of the shutdown. Steve Potts, co-owner of Bill’s Seafood Restaurant, lost a $2,500 catering deal due to the cancellation.

“The hardest part here is that we’re seasonal,” says Potts, “and we’re not going into a season when we’ll be able to make anything up.”

Another big event that got canceled was a semi-annual “pony roundup” in which the Chincoteague Volunteer Fire Company checks on the wild ponies, which number about 150, and provides veterinary care, usually with tourists looking on. “Fall Round Up has been cancelled due to the childish, idiotic actions of our government,” the fire company said on its Facebook page. Most money lost on canceled events--including fund raising used to care for the ponies--is simply gone, since tourists are unlikely to reschedule a trip to Chincoteague in November or December, once the weather has turned.

Saltwater Cowboys guide wild Chincoteague ponies as they make their way across Assateague channel. (AP Photo/Scott Neville)

Chincoteague’s love-hate relationship with the government extends to nearby Wallops Flight Facility, which has expanded from a second-tier rocket launch pad into a prominent spaceport with a busy lineup of commercial launches scheduled. Space buffs have been flocking to Chincoteague to watch rocket launches -- the way they do at Cape Canaveral, Fla. -- including a dramatic nighttime launch in September. And contract workers have been filling the town’s hotels and restaurants. But an October launch had to be canceled, with no further launches likely until the government reopens.

“Just NASA closing down affected us a lot,” says Christina Tountas, who owns the Famous Pizza and Sub Shop along with her husband Niko. “If they’re not making money, they’re not spending money.” Sales at Famous Pizza are about 25% below normal this month.

Many businesses in Chincoteague have either let go of workers or cut back on hours, the kind of small-scale deterioration in the job market that can have a big impact locally even if it doesn’t register in Washington or affect national data. At Capt. Steve’s Bait and Tackle, only two of five regular employees have been working. The shop has also cut back on orders from four distributors who ordinarily supply bait, impacting revenue upstream, as it were.

Donna Mason was planning to hire three new full-timers at the Waterside Inn, but she scotched that idea. ”I don’t know what the long-term impact of the shutdown will be,” she says. “Residual ripples will continue for a long time.” Instead of hiring, she has reduced hours for some employees and found busy work for others to do.

In Congress, there’s a bill likely to pass once the shutdown ends that will restore all lost pay for about 800,000 federal workers furloughed during the last few weeks. That will turn the shutdown into a free vacation for most of them. Congress is considering no such compensation for private-sector folks who ended up as collateral damage of the shutdown.

“It’s just another slam,” says Potts. “Nobody’s paying me or my employees for our loss.”

Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.