As the nation inches closer to a potential federal government shutdown, Maryland leaders say the state government can weather the loss of federal money for a few weeks.

Hundreds of thousands of individual Marylanders will be harmed by the loss of paychecks or disruption in aid programs if the federal government shuts down on Oct. 1 amid political wrangling on Capitol Hill. But the state government itself will take a hit, too, as the federal government annually sends billions of dollars to help pay the costs of state workers and programs.

The state’s annual budget is about $63 billion, with about $19 billion of that coming from the federal government. The federal funding includes money for Medicaid, Supplemental Nutrition Assistance Program, Temporary Assistance for Needy Families, Women Infants and Children program, transportation projects and other programs.

About 12,000 state government jobs are either fully or partially funded with federal money.

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The state, on average, receives $365 million per week to run those programs and pay those workers, according to senior officials in the administration of Gov. Wes Moore, a Democrat.

With about $5 billion in “fully liquid cash” currently available in the state’s coffers, state officials from the governor’s office, comptroller and treasurer have agreed that about $1 billion of that can be used to essentially float those programs, administration officials said.

That means the state government can keep functioning without any hiccups for about three weeks, especially if the state is assured that the federal government will ultimately cover the costs after a shutdown ends, administration officials said.

“In the near-term, we plan to use a portion of our State cash reserves to bridge fund services that rely on federal support — but only for a limited period of time and only if we maintain confidence that the federal government will reimburse the State after the shutdown,” Moore spokesman David Turner said in a statement.

If a shutdown lasts longer, the state will need to prioritize which programs and positions to fund in the absence of federal cash, administration officials said.

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Planning took place as state officials Thursday said they’re keeping close watch on revenue and budget forecasts as a pending federal shutdown approaches.

State Comptroller Brooke Lierman urged Republicans in Congress to seek resolution rather than allow a federal shutdown that could have “devastating impacts” on Marylanders.

“There are families or businesses who are depending on them to do their job and to ensure that we do not have a shutdown and that we continue to fund the federal government services,” said Lierman, a Democrat.

While Maryland’s economic growth aligns with expected forecasts, the growth rate is lower than in 2021 and 2022 when state reserves were flush with federal pandemic relief funds, Lierman said.

“Our economy is stable now; however it remains uncertain,” added State Treasurer Dereck E. Davis. “As I have said before, Maryland is not recession-proof.”

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Davis, a Democrat, took a swipe at far-right Republican lawmakers in Congress who have yet to pass a national spending plan, threatening federal operations, employee wages and benefits funding.

“While we have so-called leaders playing some foolish game of chicken to impress the bases, Marylanders and citizens across the country are facing the very real possibility of losing their ability to pay a mortgage,” Davis said.

Loans, unemployment available to laid-off feds

The state government is also making plans to help individuals and families who would be negatively affected by a shutdown.

There are about 150,000 federal civilian workers based in Maryland, plus nearly 50,000 active-duty and reserve military personnel — all of whom may be furloughed or forced to work without pay. One in nine Maryland households depend on federal dollars for wages and pensions, according to the comptroller’s office. That percentage does not include contractors or members of the intelligence community.

The state Department of Labor is preparing for a potential influx of applications for unemployment insurance payments from laid-off federal workers and contractors based in Maryland. Officials could not, however, estimate how many people might apply for unemployment due to a shutdown.

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“A federal shutdown will mean federal employees who work in Maryland will risk missing their paychecks — something most families cannot afford,” state Labor Secretary Portia Wu said in a statement.

The maximum weekly unemployment payment is $430, and the money would need to be paid back if federal workers eventually get paid their back pay, as has happened in past shutdowns. Contractors generally do not get paid back for their lost pay.

Based on the federal pay schedule, many workers should get one more full paycheck and then a partial paycheck before the checks stop altogether, a senior Moore administration official said. That gives officials hope that a shutdown might end before the cash flow completely stops for federal workers.

The Department of Labor is also activating a program that will offer no-interest loans to federal employees who must work without pay and who aren’t eligible for unemployment insurance because they aren’t available to work another job. Those loans will be offered up to $700.

“We remain steadfast in our mission to help support the economic stability of the state,” Wu said.

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