Information on Federal Government Budget Shutdown

What to Expect from the Government Shutdown

By JC Hendrickson | Tuesday, October 1, 2013 at 2:45 pm

The impact of the federal government shutdown that started at midnight Oct. 1 will depend on how long the shutdown lasts.

States will start to see revenue losses right away, as all federal programs considered discretionary will see immediate cuts. These programs include the Special Supplemental Nutrition Program for Women, Infants and Children known as WIC, and the low-income home heating assistance, known as LIHEAP. Other discretionary programs—like Temporary Assistance to Needy Families, the food stamp program and the Head Start program—may face delays and could be in danger of losing funding temporarily, depending on specific regional budgetary considerations.

The biggest chunks of federal-to-state spending are considered mandatory and are, in theory, not affected by the government shutdown. These programs include Medicaid and Social Security. With more than 800,000 federal employees on mandatory furlough starting Oct. 1, however, state governments will face difficulty in the day-to-day administration of these programs, which will worsen the longer the shutdown lasts.

The shutdown occurred after the House of Representatives made multiple attempts to tie provisions that would rollback parts of the Patient Protection and Affordable Care Act to a stopgap measure to fund the government.

Congress has not passed full appropriations bills in several years. It has instead has passed short-term stopgap measures known as continuing resolutions to keep the government running. While the passage of continuing resolutions has been contentious at times, the government has generally been funded at the post-sequestration level without attempts to tie policy changes to the stopgap funding. This is the first government shutdown in 17 years and, in recent history, there has never been a shutdown due to attempts to attach new policy to a continuing resolution.

Aside from the immediate cost to states, the shutdown could have an even bigger impact on state economies. According to a report by the PEW Charitable Trusts Fiscal Federalism Initiative, while federal spending varies widely among states, those that have a greater government or federal contractor presence could face a harder blow from the shutdown.

The Council of State Governments will continue to monitor the federal government shutdown and ensure state leaders are informed on its impacts.