Advocacy News – Sept. 28, 2023
As Congress attempts to negotiate a final deal on the federal budget, things are not looking promising. The fiscal year ends on Saturday, leaving only a couple of days left for earnest deliberation on how to fully fund federal government operations and programs for the next fiscal year. Absent a deal, the government will shut down at 12:01 a.m. EST, commencing the fourth shutdown in the last decade and the sixth shutdown in 28 years. In each case, these events are driven by partisan disagreements relating to priority funding, essential programs, budget cuts, and whether a continuing resolution is an acceptable short-term solution to continue negotiations.
Why it matters: Federal programs and departments that are managed by the federal government but operate in Michigan will either be closed or furloughed if a deal isn’t reached. This includes:
- Federal Employees: Thousands of federal employees work in Michigan, primarily in agencies like the Internal Revenue Service (IRS), the Social Security Administration, the Department of Homeland Security, and the National Park Service. During a shutdown, many federal employees may be furloughed or required to work without pay, which can have a direct impact on their finances and the local economy.
- National Parks and Public Lands: Michigan is home to several national parks, forests, and wildlife refuges, such as Sleeping Bear Dunes National Lakeshore and the Huron-Manistee National Forests. During a shutdown, these sites may experience reduced staffing, limited access, and closures, affecting tourism and outdoor recreational activities.
- Veterans’ Services: Michigan has a significant veteran population, and federal funding supports veterans’ healthcare, education, and other services. A government shutdown could disrupt these services and delay benefits for veterans.
- Federal Courts: Federal courts in Michigan, including the U.S. District Court and U.S. Court of Appeals, may experience delays and reduced operations during a government shutdown, affecting the legal system and individuals with pending cases.
- Childcare Centers: Childcare providers and centers that receive funding from the federal government may be severely impacted by the government shutdown. Many childcare centers have received federal funding as a result of the impact COVID-19 has had on the industry. The federal government has provided approximately $24 billion since 2020, and the expiration date of those funds are coming up and without their extension and the impending government shutdown likely delaying Congress in addressing the issue, children, parents, and employers will feel the pinch. According to the Century Foundation, a potential end to these funds may mean 3.2 million children would lose their spots in childcare centers.
The ripple effects of a federal government shutdown can reach far and wide impacting state resources and programming. Michigan’s newest budget also takes effect on Oct. 1 and is predicated on 40% federal funding. Without the dispersal of those federal funds, the state will be forced to reach into the other 60% of the budget and adjust cashflow to cover short term deficits in critical programs. Depending on how long a shutdown persists, the following services may be impacted on a state level:
- State Hiring Freeze: This is usually ordered within a few days of a shutdown as a precaution in case the shutdown extends for a prolonged period of time.
- Social Assistance: The state will likely shift funding priority to the food stamp program, which serves 1.35 million residents, or 13% of the state’s population. This includes the Women, Infants, and Children nutrition program (WIC) that serves approximately 321,000 and school lunch programs that now feed all 1.4 million K-12 students per the latest budget passed by the legislature.
These impacts have the potential to reach business owners too. Programs including the Occupational Safety and Health Administration workplace safety inspections, and nursing home inspections would likely experience a hiatus to conserve resources for other critical operations. Additionally, production of labor market and unemployment rates would also be suspended until the federal government re-opened. These delays may impact continued communication with state employees or prevent them from necessary regulatory services to ensure businesses can continue to operate in full compliance with the law.
The Michigan Chamber stands ready to assist with connection to resources and answers if a federal shutdown does occur. For any questions or concerns, please contact Becky Burtka at bburtka@michamber.com.