Maryland officials mobilized Tuesday ahead of a potentially prolonged federal government shutdown that they said would put a significant strain on the state and its mass of public employees.
Convening about 10 hours before the shutdown was set to begin, top officials in Gov. Wes Moore’s administration and Comptroller Brooke Lierman’s office said the looming shutdown could cost Maryland upwards of $700,000 in state revenue per day while threatening funding streams for welfare programs and jobs for a large swath of workers.
“The impact to the state is going to be broad,” Matt Verghese, the director of Moore’s federal relations office, said during the meeting of the Maryland General Assembly’s Joint Federal Action Oversight Committee.
Verghese and others outlined both the immediate and long-term concerns, including a potential surge in unemployment insurance claims and questions about whether President Donald Trump’s administration will follow tradition by back paying states for programs when a budget agreement is eventually reached.
“Because we have not received assurances of reimbursement by the Trump administration, if this is an extended shutdown, it will force tough positions by the governor and (the Maryland Department of Budget and Management) here in the state in terms of prioritizing programs that may need to be shuttered if this goes on for multiple weeks,” Verghese said.
About 269,000 federal employees live in Maryland, with about 161,000 federal jobs physically located in the state at agencies like the Social Security Administration in Woodlawn.
Furloughing many of those positions — or forcing employees to work without pay — could cost the state millions of dollars in tax revenue.
Deputy Comptroller Andrew Schaufele said Maryland saw a roughly $13.2 million daily loss in economic activity during the last extended shutdown. The hit to state revenues could be more than $700,000 per day under a similarly long shutdown now, Schaufele said.
Maryland Labor Secretary Portia Wu said her agency has prepared the state’s unemployment insurance system as well as recently enacted loan programs specifically aimed at federal workers.
One of those programs offers $700 no-interest loans to Maryland residents who are considered “excepted” or “essential” and thus are forced to work without pay during a shutdown. Because those employees are expected to receive back pay when the shutdown ends, the loan is required to be repaid within 45 days after the end of the shutdown. Employees can begin applying for those loans if the shutdown lasts more than two weeks, Wu said.
Another $700 no-interest loan is available to federal employees who have been fired this year. That program was launched in June, and the Department of Labor has awarded about 75 loans so far, Wu said.
Workers who may be eligible for the loans are Social Security Administration employees in Maryland whose union said Tuesday they expect to receive the “excepted” designation requiring them to work without pay.
Even if back pay is offered when the shutdown eventually ends, that does little to ease concerns of workers who are facing financial pressures now, the union said.
“We are being asked to keep delivering earned benefits while our own financial situations suffer. It doesn’t matter to bill collectors that our employees will be paid ‘when it ends,’” the American Federation of Government Employees SSA General Committee said in a statement. “Bills come due, medical crises strike, and children must be fed regardless of whether the government functions. We have been here, serving the American people, for nearly a century, and we deserve to be paid on time.”
Maryland, because of its proximity to and reliance on the federal government, has already been at risk of some of the most severe financial impacts of the Trump administration.
More than 15,000 federal jobs in Maryland have been eliminated since Trump took office, with thousands more expected to add to that tally after accounting for deferred resignations. Tax collections have not yet taken a hit from those job losses, though top state fiscal officers warned last week that they expect the local economy to suffer as a result of Trump’s moves.
Meanwhile, other federal actions — mainly, Trump’s signature tax bill that passed this summer — will cost the state $189.3 million in revenue in the next two years, according to Lierman’s office.
Tuesday’s meeting came after Maryland Democrats had raised alarms for months that a federal shutdown would add to the compounding problems.
With so much discretion left to the president in a shutdown, Verghese and others said it’s unclear what the full range of impacts could be in the coming weeks.
“Whether this shutdown lasts seven days or seven weeks remains a big open question… I know this is going to be a trying time for our state,” Verghese said.
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