Sacramento Companies Worry Fall Over Fiscal Cliff Will Slow Business
SACRAMENTO (CBS13) – Time’s ticking away for lawmakers in Washington to get something done to avert the fiscal cliff.
President Barack Obama is optimistic that lawmakers will reach a deal before the Jan. 1, 2013 deadline. The country is now just a little over three days from going over the fiscal cliff, unless Congress can reach a deal.
Business has continued to grow since Red Rabbit Kitchen & Bar opened last February, but now there’s the red flag of the fiscal cliff, and the owners are worried that if we go over, it could significantly slow down business.
Just as business was starting to sizzle, the owners of Red Rabbit fear leaders in Washington will miss the final bell on the fiscal cliff.
“We want to know what the leaders of this country are doing for our sustainability,” said Sonny Mayugba of Red Rabbit.
If those leaders fail to reach a deal by New Years, tax cuts will expire, meaning smaller pay checks and fewer customers going out to eat.
“If we see less customers, then we will be forced to adjust accordingly,” said Mayugba.
That means cutbacks.
“Amount of inventory, obviously staffing could change in terms of hours,” said Mayugba.
Roger Niello is part-owner of several car dealerships in the area, which employs more than 500 people. He too is keeping a close eye on the approaching fiscal cliff.
“I would fear that it might put a halt in the halting recovery that we are experiencing right now,” he said.
Again, smaller paychecks means fewer customers buying cars.
“When there’s a lack of confidence and, or uncertainty, that doesn’t encourage businesses to invest and employ people,” said Niello.
Now, as business owners wait to see how things shake out, the hope is their businesses will make it through uncertain times.
“We think that it’s a little bit of Darwinism. The really strong and great quality will end up surviving,” said Mayugba.
In Rancho Cordova, Aerojet has 1,400 employees; the fear is that number will drop after big cuts to the defense department, and that would have a big ripple effect on anyone doing business in the area.
“We are gravely concerned that this could really hit our business,” said Andi Rothman.
Rothman, who owns Vintner’s Cellar Custom Winery, says going over the fiscal cliff is a double whammy for her.
Her business is near Aerojet, a private company that thrives on public cash. It receiveshundreds of millions of dollars in defense contracts. If congress can’t make a deal, defense spending will take a huge hit. What impact that may have for Aerojet is still unclear.
“If Aerojet cuts jobs, naturally that’s going to hurt our business, less customers coming in,” said Rothman. “They’re coming in after work and enjoying some wine. So we will see less people, which will directly affect our business.”
Monster Mini Golf, which is also close to Aerojet, says they have similar concerns.
“They have corporate group events here, team building stuff, and that would be bad if they didn’t have that anymore as well,” said David Holshevnikoff, Monster Mini Golf.
While businesses brace for the worst, so are the unemployed. About four hundred thousand Californians will no longer have unemployment benefits. That’s close to half the people getting benefits as part of a federal extension.
“This is money that’s critical for paying rent, mortgages, groceries, getting gas in the car, so it’s very difficult to have this money suddenly cut off,” said Loree Levy, Employment Development Department.
Now the state is ready to continue the unemployment benefits if congress makes a deal; but if not, they are out of luck. In the last four and a half years, $40 billion has been paid out in federal extension benefits in California.