When Congress returns to Washington this week, the clock is ticking on a potential federal government shutdown — and few states have more at stake than Maryland.
Funding expires at midnight on September 30. Without action, most federal agencies will be forced to close or curtail operations, resulting in furloughs, missed paychecks, and widespread fiscal consequences.
With hundreds of thousands of federal employees, tens of thousands of contractors, and one in nine taxpayers tied to federal employment or retirement income, the economic consequences would ripple quickly through Maryland’s workforce, county budgets, and local economies.
Uncertain Path Forward
Congress has yet to pass any of the 12 required appropriations bills for fiscal 2026. A short-term extension — known as a continuing resolution — is the most likely option, but even that path is uncertain. Senate Republicans will need Democratic votes to overcome the filibuster threshold, while divisions within both parties further cloud the outlook.
The White House has complicated matters by withholding previously appropriated foreign aid and pursuing additional rescission proposals, inflaming tensions and adding uncertainty to an already fractured process.
Why Maryland Is Vulnerable
Federal shutdowns hit Maryland harder than most states.
According to the Comptroller’s Office, an estimated 229,000 Maryland residents are employed by the federal government in the defense and non-defense civilian workforce (not including active-duty service members) and have combined annual earnings of $26.9 billion. Federal jobs located in Maryland represent 6% of the state’s overall employment and 10% of overall wages.
A shutdown halts paychecks. Essential employees continue working without pay, while agencies place others on furlough. Although most federal workers eventually receive back pay, contractors and small businesses rarely do — leaving them with permanent income loss and a lasting strain on local communities.
As previously reported on Conduit Street, during the 2018–2019 shutdown, 172,000 Marylanders lost $778 million in wages. That meant $57.5 million less in state and local income tax withholding and $2.1 million less in sales tax collections. A new shutdown could deliver an even sharper fiscal shock.
The Bigger Problem
Even if lawmakers pass a temporary funding bill, it only delays the crisis. Reliance on short-term measures underscores the dysfunction of the federal budget process, where deadlines often dominate and long-term fiscal planning takes a backseat.
For Maryland counties, this uncertainty complicates efforts to plan budgets, sustain essential services, and ensure stability for residents.
What Comes Next
Lawmakers have just weeks to agree on a path forward, and Maryland’s workforce and economy will feel the impact of what comes next. The decisions made — or not made — in the coming weeks will carry serious consequences for Maryland’s federal workforce, contractors, and economy.
In addition to imploring Congress to avoid a government shutdown that could have severe consequences for federal workers and the Maryland economy, counties urge bipartisan support for fiscal policies that strengthen the federal-state-local partnership and help achieve our shared goals of keeping communities healthy, safe, and vibrant.
MACo will continue to monitor developments in Washington and assess the impacts on county governments and communities across Maryland.
Stay tuned to Conduit Street for more information.
