Feds Strike Deal to Avert Government Shutdown

Update: Congress on Thursday gave final approval to legislation to keep the government funded through mid-February after Republicans dropped a threat to force a shutdown over the Biden administration’s vaccine mandates.

The short-term funding measure, known as a continuing resolution, would fund government operations through February 18, 2022, but does not raise the debt ceiling, which lawmakers must address separately in the weeks ahead.

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.

2021 marks the 25th year in a row that Congress has failed to pass appropriations bills on time.

With government funding set to expire on Friday at midnight, a continuing resolution gives lawmakers more time to strike a long-term appropriations deal. But due to U.S. Senate rules, all 100 senators would need to agree to pass the plan before Friday, and a group of Senate Republicans is threatening to force a shutdown over the Biden administration’s vaccine mandate for large employers.

The discretionary budget funds most federal departments. If Congress does not reach a spending agreement by December 3 at 11:59 pm, these departments must close unless they have surplus funds.

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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