Maryland leaders outlined on Tuesday both the serious risks of a federal shutdown and the steps they are taking to manage its impact on workers, revenues, and local communities. Without a last-minute deal in Washington, the federal government will close at midnight.
Update — October 1, 2025: The federal government officially shut down after Congress failed to reach a last-minute agreement. As the closure begins, the impacts described in Tuesday’s Joint Federal Action Oversight Committee session are no longer hypothetical — they are now unfolding in real time. Maryland leaders emphasized both the serious risks to workers, contractors, and revenues, as well as the steps the State and counties are taking to help manage the fallout.
The Joint Federal Action Oversight Committee — led by Senate President Bill Ferguson and House Speaker Adrienne Jones, with Senators and Delegates from across the state — heard from Lt. Governor Aruna Miller, Department of Labor Secretary Portia Wu, Chief Deputy Comptroller Andy Schaufele, and senior administration officials.
As previously reported on Conduit Street, MACo has offered a deeper look at the ripple effects of federal government shutdowns.
Tuesday’s meeting put sharper numbers on those risks, grounding the discussion in real fiscal and community stakes for Maryland and its counties. The hearing underscored how lost wages, delayed reimbursements, and stalled projects can quickly threaten local economies.
Lt. Governor Miller stressed that while the threat of a shutdown is real, so is Maryland’s resolve. She pointed to tools enacted since the 2019 shutdown and promised coordination with legislators, counties, and community partners to “leave no one behind” if paychecks stop.
Matt Verghese, Governor Moore’s director of federal relations, explained how the Anti-Deficiency Act dictates which programs remain open. Social Security, Medicare, and Medicaid will continue, but many federal services will pause. Federal employees not deemed “excepted” face furloughs, and contractors have no guaranteed pay.
Unlike past shutdowns, the Trump Administration has not guaranteed reimbursement for states if they front money to keep SNAP, TANF, or WIC running. Verghese expects most federal education funding to continue, but Head Start and the Child Care Development Block Grant may face disruptions if the closure persists.
Labor Secretary Portia Wu highlighted Maryland’s federal footprint, noting that approximately 270,000 federal employees and more than 200,000 contractors live in the state. These jobs pay well and anchor Maryland’s economy.
Secretary Wu explained that her department has lined up multiple safety nets for workers during a shutdown. Maryland’s no-interest loan program for “excepted” federal employees has already been tested and can launch immediately.
Furloughed workers can claim unemployment insurance, while terminated employees qualify for emergency loans. To meet a surge in demand, the Department of Labor expanded in-person support, strengthened its claims system, and trained a dedicated team focused on federal claims.
Chief Deputy Comptroller Andy Schaufele added the fiscal view. Roughly $150 billion in federal dollars flow through Maryland each year. Direct federal wages account for 12 percent of all income earned in the state, and 13 percent of households include a federal worker or retiree.
Southern Maryland faces outsized exposure. In Charles, St. Mary’s, and Calvert counties, nearly a quarter of households rely on federal wages. When accounting for federal contractors, the share approaches half the local economy.
During the 2018–2019 shutdown, Marylanders lost $778 million in wages, resulting in a reduction of state and local tax revenues. Schaufele estimated the shutdown cost Maryland about $700,000 per day in lost revenue. The risk today is higher since all twelve appropriations-funded agencies would close.
For counties, the message was clear: while Social Security checks and most school funding continue, the loss of wages for contractors, delayed reimbursements, and stalled projects could strain local budgets and services. With each passing day of uncertainty, the fiscal and community risks escalate.
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.
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