Feds Narrowly Avert Another Government Shutdown…for Now

With only hours to spare, Congress passed, and President Biden signed, legislation to avoid yet another partial federal government shutdown.

The short-term funding measure, known as a continuing resolution, funds government operations through December 3, 2021, but does not raise the debt ceiling, which lawmakers must address separately in the weeks ahead. The House approved the continuing resolution by a 254-175 vote not long after Senate passage in a 65-35 vote.

Every year, Congress must pass, and the President must sign, budget legislation for the next fiscal year — a series of bills that make up the discretionary spending budget. However, Congress has yet to enact any spending bills for fiscal 2022 as Democrats and Republicans struggle to reach a funding agreement.

The United States will reach its borrowing limit by mid-October, and without action, the government could default on its debt for the first time in the nation’s history. Raising the debt limit does not incur new federal debt, but it is a statutory requirement to allow for previously approved borrowing.

The discretionary budget funds most federal departments. Absent a continuing resolution, these departments would have shut down at midnight on September 30 — the end of the federal government’s fiscal year.

A similar situation in 2019 led to the most protracted partial federal government shutdown in U.S. history. That impasse, which lasted 35 days, had a significant impact on federal employees and related segments of the Maryland and regional economies.

As previously reported on Conduit Street, approximately 172,000 Marylanders affected by the 2019 partial government shutdown missed out on an estimated $778 million in wages, resulting in $57.5 million less in state and local income tax withholding and $2.1 million less in sales tax collections. While furloughed federal workers received back pay once the shutdown ended, it’s unlikely that federal contractors could recoup lost wages.

In response, the Maryland General Assembly passed the Federal Shutdown Paycheck Protection Act, which provides no-interest loans to essential government employees who must report to work without pay.

Stay tuned to Conduit Street for more information.

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