Md. officials outline shutdown response, plan to bridge with cash reserves for several weeks

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With days to go before an expected federal government shutdown, Moore administration officials Thursday outlined the challenges awaiting Marylanders and said the state intends to use cash reserves for several weeks to bridge a stoppage in federal funding.

The Gov. Wes Moore administration also cast blame for the looming Oct. 1 shutdown on “extremist” congressional Republicans.

“The Moore-Miller administration is calling on House Republicans to put aside the partisan games, stop the dysfunction, do what’s right, and avert the perilous and preventable course they’ve set us on,” David Turner, the governor’s communications director and senior adviser, said in a statement.

On Thursday, the Democratic-held Senate and Republican-controlled House were working on vastly different plans to avert a shutdown. House Speaker Kevin McCarthy was struggling to garner support from hard-right conservatives to keep the government open, according to a report from The Associated Press.

Maryland has cash available to bridge for several weeks the state employee salaries and services — including K-12 public education and affordable housing programs — that rely on federal funding, though only if Congress is expected to reimburse states after the shutdown, said senior Moore administration officials, who spoke Thursday on the condition of anonymity to brief reporters.

If the shutdown lasts for more than a few weeks, the state will have to prioritize bridging some payments over others, the officials said.

RELATED: A government shutdown is nearing this weekend. What does it mean, who’s hit and what’s next?

A senior administration official said the state is comfortable floating up to roughly $1 billion to bridge the federal funding gap, based on the $5 billion in liquid cash the state currently has available.

It’s not yet clear exactly how long it would take for the state to reach that threshold, the official said. The time frame, expected to be several weeks, depends on which programs have reserves or a prior appropriation on which they can rely.

In the coming days, the Maryland Department of Labor is expected to connect furloughed federal workers and federal contractors who’ve been laid off or otherwise not paid to unemployment insurance.

The maximum unemployment benefit, though, is just $430 per week. Those who receive a retroactive payment from the federal government following a shutdown would be required to pay back their unemployment insurance.

During the record-long partial government shutdown that began in late 2018 and lasted into early 2019, thousands of National Treasury Employees Union members across the country missed a mortgage payment, took out short-term loans and ran up their credit cards because they weren’t paid for more than a month, said Doreen Greenwald, the union’s national president.

She said members of the union, which represents employees in 35 federal agencies and offices, had to rely on food banks, pull their children from child care and seek leniency from creditors.

“Career civil servants, many of them already living paycheck to paycheck, do not deserve to have their financial security shattered by political dysfunction,” Greenwald said in a statement Monday.

The Maryland Department of Labor is also standing up a loan program passed in 2019 for essential employees who may have to work without pay. Those eligible can apply for a no-interest loan of $700 that must be repaid after the shutdown ends.

Unions representing federal employees have in recent days highlighted the harm they say previous shutdowns have caused and called for Congress to pass a continuing resolution that would avoid a shutdown.

Everett Kelley, national president of the American Federation of Government Employees, which represents 750,000 workers in the federal and Washington, D.C., governments, said the partial shutdown in 2019 left 800,000 employees without a paycheck for five weeks. Half had to work without pay.

A federal shutdown would leave roughly 150,000 federal workers in Maryland at risk of being furloughed without pay and nearly 50,000 active duty and reserve personnel in the military would have to work with their wages on hold.

Reliance on federal income is especially pronounced in St. Mary’s and Charles counties, where in tax year 2021 federal wages accounted for 21% and 20% of the local income base, respectively, according to the comptroller’s office.

Federal wages comprised about 14% of income in Prince George’s and Calvert counties.

Statewide, about 8% of all income earned was from federal wages, not including income for federal contractors, federally supported researchers or service providers.

Not all federal funding streams would immediately end in the event of a shutdown. Medicaid and foster care providers would have access to funding from the first quarter of the fiscal year, and federal retirement and Social Security payments would continue.

But, state officials said, more than 100,000 people who rely on nutrition assistance, including pregnant mothers and their babies and those who use food stamps to pay for groceries, could temporarily lose their benefits.

The shutdown would delay small business loans that boost the state’s small business, housing loans going to the Department of Agriculture and aid for family farms, and it would hinder travel, with TSA agents and air traffic controllers potentially facing furloughs.