How Might A Government Shutdown Impact States?

Lawmakers now have just over 24 hours to reach a budget deal and avert a partial government shutdown. The word partial is crucial since what's labeled essential government business will continue. But some 800,000 government workers face furloughs without a deal in D.C. And state governments are scrambling to figure out what a shutdown would mean for them.

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Lawmakers and President Obama now have just over 24 hours to reach a budget deal and avert a partial government shutdown. The word partial is key here since all business considered essential will continue. But without a deal, some 800,000 government workers face furloughs.

And as NPR's Ted Robbins reports, state governments are scrambling to figure out what a shutdown would mean for them.

TED ROBBINS: Steve Meissner's phone has been ringing a lot the last few days, mostly reporters calling.

STEVE MEISSNER: And what we're telling them at this moment is we're studying the situation in conjunction with the governor's office and that's what we're doing at the moment.

ROBBINS: Meissner is spokesman for the Arizona Department of Economic Security. That's the state agency which administers unemployment benefits. Unemployment checks are paid using both state and federal funds. Meissner says they really don't know what'll happen if the federal government shuts down Friday.

MEISSNER: If Friday comes and a potential shutdown still looms, then we will be telling folks how we plan to handle it. Until then, it's wait, watch and prepare.

ROBBINS: The uncertainty is largely because the federal government would shut down only nonessential services and no one's told the states exactly which programs would be affected. Medicare and Medicaid would not be. The federal government did notify states that those payments will continue through June, even with a federal shutdown.

If unemployment checks aren't issued, though, it'd be a crippling blow to those who need the money to pay bills. But even that is not likely to happen immediately.

SCOTT PATTISON: Yeah, every state, even those in the worst fiscal situation, always have some cash. They should have the cash to cover the loss of the federal funds.

ROBBINS: Scott Pattison heads the National Association of State Budget Officers. He says it's all about timing. If a shutdown lasts only a few days, the impact to states would be minimal because federal money isn't needed every day.

PATTISON: So, for example, if they only draw down or take those funds from the federal government on a monthly basis, then it's not until a month from now that that program that receives federal funds will have a problem.

ROBBINS: And if a shutdown lasts that long, Pattison says the picture turns darker for states. They run out of cash to pay workers and social service recipients and they lose sales tax from businesses which rely on the federal government.

In Arizona, closing Grand Canyon National Park for even a couple of days would have an affect on the tourism-related businesses around the park.

Tony Shields isn't worried, even though he's almost completely dependent on federal workers. He manages a company which sells military patches and nametags a few blocks away from Davis-Monthan Air Force Base in Tucson. But he says a short shutdown wouldn't be much different than when federal accounts are temporarily suspended at the start of many fiscal years in October.

TONY SHIELDS: We start an IOU list. We keep all the invoices from the orders and then when the credit cards are turned back on, they all let us know and we can start charging again.

ROBBINS: Everyone we spoke with hopes a shutdown would be short. For the states, as well as the federal government, the economic and political costs of a long shutdown could be terrible.

Ted Robbins, NPR News, Tucson.

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