The Risk of Another Government Shutdown is Increasing

November 19, 2019 - (10 min read)

This week, Congress is expected to extend their deadline again for passing the twelve annual spending bills. Following the first deadline of October 1st, the start of a new fiscal year, Congress voted to extend the deadline to November 22nd.  With the new deadline rapidly approaching, Congress is expected to give themselves additional time by voting on a Continuing Resolution (CR) to keep the federal government funded and operating until December 20th.

The CR to December 20th is likely to pass. However, there are doubts that work on the twelve spending bills will be completed by the deadline, given the impact of the holidays and the impeachment inquiry on the Congressional calendar. It would not be out of the norm for Congress to push the timeline for completing the FY2020 bills into February.

According to Congressional leaders, funding for the border wall with Mexico is the primary unresolved issue. This is the same issue that led to the last partial government shutdown. Speaking on behalf of the Administration, Treasury Secretary Steve Mnuchin said “We have no intention of having a shutdown. I think everybody intends to keep the government open”. Despite some signs of optimism, local leaders ought to be thinking about how they would prepare for the next shutdown.

To aid in that effort, NLC has created a Government Shutdown Checklist for Local Officials.

Federal Government Shutdown Checklist for Local Officials

Local officials expect our leaders in Washington to meet their most basic obligation and keep the federal government open. The causes or reasons for any failure to meet that most basic obligation is beside the point. Federal shutdowns, partial or total, have an immediate impact – both on local budgets and the most vulnerable residents in our communities.

According to a detailed Q&A from the Committee for a Responsible Federal Budget, when a funding lapse results in the shutdown of a federal agency, the government must discontinue all non-essential discretionary functions until new funding legislation is passed and signed into law. Additionally, according to a White House Shutdown FAQ, all normally, routine, ongoing operational and administrative activities relating to contract or grant administration (including payment processing) cannot continue when there is a lapse in funding. Moreover, federal agency employees who are paid with annual appropriations and who perform an activity associated with contract or grant administration (including oversight, inspection, payment or accounting) should generally not continue work during a lapse in appropriations.

In other words, federal discretionary grants that are administered to local governments from shut down federal agencies will be unavailable for reimbursement to local governments. Federal agency staff will generally be unavailable to answer questions or offer technical assistance throughout the duration of a federal government shutdown. Local employees funded by federal grants may also be required to stop work.

A short shutdown of a week or less will have little to no impact on cities (although it will cost the federal government plenty to furlough employees, mothball offices, and reopen even a short time later). The effects of a longer shutdown multiply quickly, including funding lapses, project delays, and potential layoffs. As federal funding for services dry up, residents often expect local governments to step in with supplemental funding. Ultimately, it falls on cities and states to bear the cost of the shutdown to the broader economy, and with less tax revenue for all levels of government.

The federal law that prohibits agencies from incurring obligations in advance of appropriations, the Antideficiency Act, also requires an “orderly shutdown” when there has been a lapse in appropriations. Of course, actual government shutdowns are anything but orderly, and local officials should expect to encounter inconsistencies across the board.

There are steps local officials can take to reassure vulnerable residents and mitigate the impact on local budgets. NLC has developed a Federal Shutdown Checklist for cities, towns, and villages. The checklist is built on local governments and responses of local leaders to past shutdowns.  The checklist offers ways to

  1. Mitigate the local economic impact of the federal shutdown;
  2. Protect your community’s low-income and vulnerable residents;
  3. Advocate for your community.

Mitigating the Local Economic Impact of a Federal Government Shutdown

  1. Federal lands, monuments, landmarks, and parks within your jurisdiction may be “closed”. Work with state officials and/or local civic institutions and volunteers to “reopen” these areas so that they remain safely accessible to visitors and tourists. Develop a communications plan with your department of tourism to keep visitors updated. Consider if your city has the financial resources to allow public employees, including sanitation crews, to temporarily supplant federal services
    1. Governor Cuomo Announces New York Will Intervene to Keep Statue of Liberty and Ellis Island Open in Face of Federal Government Shutdown
    2. Utah prepared to weather federal government partial shutdown
  1. Take steps to discover if there are federal workers who will be subject to furlough in your community. Furloughed federal employees will need help, and the loss of paychecks will negatively impact sales revenue for small business owners and tax revenue for local governments. If you don’t know where to start, contact the U.S. Office of Personnel Management Office of Intergovernmental Affairs to ask for data on federal employees in your area.
    1. S. Office of Personnel Management Office of Intergovernmental Affairs
    2. Federal workers in Washington aren’t the only ones going without pay
    3. S. towns with federal workers brace for impact as the shutdown continues
  1. Anticipate disruption, particularly if there are “essential” federal employees in your community who will be forced to work without pay. Past examples include air traffic controllers, Transportation Security Agency employees, FBI agents, DEA agents, and correction officers.
    1. Some TSA agents across the country are having ‘sickouts.’ This was the scene at IND.
    2. TEXRail abruptly calls off plans to run the trains Saturday, citing federal shutdown
  1. Work with your local Chamber of Commerce and other small business associations to establish a fund for loans or assistance to eligible small businesses and local entrepreneurs at risk of shutting down as a result of losses related to the federal shutdown.
    1. New Craft Beers Are ‘In A Holding Pattern’ Thanks To the Shutdown
    2. Three Reasons the Government Shutdown Is Hurting Small Businesses
    3. This is ridiculous’: Small-business owners can’t get loans as shutdown enters Day 20.
  1. Develop plans to help federal contractors and employees living paycheck-to-paycheck.
    1. Shutdown already costs $133 million in state road projects
    2. The government shutdown spotlights a bigger issue: 78% of US workers live paycheck to paycheck
  1. Reach out to local financial institutions and request a period of credit relief where missed payments are not reported to credit bureaus. Include any special temporary financial products they can offer in your communications to residents, such as no-interest loans or low-cost credit.
    1. USAA, a traditional safeguard for military families, is under fire for denying loans to Coast Guard clients during the government shutdown
    2. Government Shutdown Would Delay Processing of Thousands of Mortgages Per Day 

Protecting Low-Income and Vulnerable Residents During a Federal Government Shutdown

  1. Develop and administer a public emergency loan fund for furloughed and impacted employees to make their rent, mortgage, and utility payments. Enact temporary ordinances to stop evictions and utility shut offs connected to the federal shutdown.
    1. The shutdown has federal families experiencing instability already felt by many
    2. Furloughed federal workers get extension on taxes, water bills in Ferndale
    3. One City’s Solution for Airport Employees Working Without Pay
    4. Denver Offers $5,000 in Mortgage Aid for Eligible Federal Workers Hit by Shutdown
  1. Federal contractors, unlike full employees, can’t count on backpay. There may be a rush to file for unemployment. Help contractors and others understand their options and how to navigate the system.
    1. Not Expecting Back Pay, Government Contractors Collect Unemployment, Dip into Savings
    2. ‘Tens of Thousands’ of Government Contractors Laid Off Due to Shutdown
    3. The lowest-paid shutdown workers aren’t getting back pay
  1. City officials should take steps to preserve housing stability for low-income renters during a federal government shutdown. Property managers, landlords, and their residents are all likely to experience hardship during a federal government shutdown. Landlords rely on monthly cash-flow from rent, and low-income renters rely on federal subsidy payments to their landlords. Misinformation on either side can have drastic and lasting consequences. Reach out to landlords and low-income renters to let them know their rights and responsibilities during the shutdown.
    1. Cities Scramble as Shutdown Leaves Families in Federal Housing Vulnerable
    2. Shutdown’s Pain Cuts Deep for the Homeless and Other Vulnerable Americans
    3. Some Renters Are Already Facing Eviction, Thanks To the Shutdown
    4. San José City Council implemented a temporary moratorium on residential evictions for non-payment of rent by tenants affected by the federal government shutdown
  1. Public Housing Agencies may lose access to their federal operating funds. Reach out to PHA Directors to ask for their contingency plans – and if they anticipate needing local government assistance to maintain the safety and security of public housing residents. Large urban housing authorities generally have larger reserves for emergency situations, but small and rural agencies may not — putting seniors, people with disabilities, and children at risk.
    1. Because of the shutdown, more than 1,000 affordable housing contracts have expired
    2. How the government shutdown is hurting some of America’s poorest families
    3. National Rural Housing Coalition Blog: Shutdown Impacts Rural Housing
  1. Coordinate a call to action with hunger and food services, food pantries, etc. For basic human needs, it’s important to communicate the facts correctly to ensure assistance is delivered where it’s needed, and to prevent misinformation that can lead to panic.
    1. What Does the Shutdown Mean for Food Stamps?
    2. Hundreds line up for mobile food pantry in Delaware after food stamp confusion
  1. Partner with utilities and put a plan in place for customers to avoid disconnections related to a shutdown or loss of federal assistance.
    1. C. area utilities offer help to furloughed federal employees during shutdown
  1. Any disruption to the availability of public transportation will severely impact vulnerable workers and residents that lack access to alternatives. Assess the severity of a potential shutdown on your transit system and have a plan in place.
    1. ‘We’re done’: Shutdown strikes small, midsize and rural transit
  1. Work with your colleagues in the county government to ensure uninterrupted provision of healthcare to the indigent and the elderly. Funding for senior meals, for preventing elder abuse, and adult day care may be at risk.
    1. He can’t pick up his insulin because of the government shutdown. How workers are hurting

Advocate for Your Community!

  1. After the shutdown ends and certainty is restored, take time to write a “Shutdown Ordinance” that contains your lessons learned and put them into action automatically whenever the threat rearises.
  2. Contact your Congressional Delegation. Members of Congress and their staff need to know the toll that the ongoing budget gridlock is having on the people in their states and districts. After you have contacted Congress, be sure to share what you are seeing on the ground with NLC. We are compiling and sharing news and feedback from cities and towns across the United States.
    2. Federal Shutdown Ends, but Damage to Cities Remains
    3. Shutdown Cost the D.C. Region Nearly $200 Million in Tax Revenue


About the Author: Michael-Wallace-small.jpgMichael Wallace is the Program Director for Community and Economic Development at the National League of Cities. Follow him on Twitter @MikeWallaceII.