With another government shutdown deadline less than a month away and no end in sight to the feuding over who House Republicans will elect speaker, Maryland officials are setting up a new lifeline for some federal employees who may soon be forced to work without pay.
The program — pending approval at Wednesday’s state Board of Public Works meeting — would offer small, no-interest loans to civilian federal employees who work in Maryland but are not otherwise eligible for unemployment insurance benefits.
“It’s a fundamental issue of fairness,” said Del. Jessica Feldmark, a Howard County Democrat who helped come up with the idea during the last, historic 35-day federal government shutdown that ended in 2019.
“We have Maryland residents who are serving our community and our country in roles that are really critical to our community, which is why they’re still required to show up, and they weren’t able to access the same assistance that federal employees who were not working,” Feldmark said.
Congress narrowly avoided a lapse in appropriations earlier this month in a deal that kept previous funding levels through Nov. 17.
Not all U.S. House Republicans agreed on the plan, however, and Rep. Kevin McCarthy was soon ousted from his position as speaker, creating a leadership gap that continues to paralyze any progress on the budget and all other legislation.
Maryland’s workforce, meanwhile, stands to bear the brunt of a shutdown more than those of other states. The roughly 160,000 federal jobs here represent more than 5% of all jobs in the state, far above the national average.
Depending on each federal agency’s contingency plans and funding levels, workers may be furloughed or asked to work without pay, which those employees and their unions say can have dire consequences for those who live paycheck-to-paycheck.
“A federal shutdown will mean federal employees who work in Maryland will risk missing their paychecks — something most families cannot afford,” Maryland Labor Secretary Portia Wu said in a statement earlier this month.
If Congress misses the next deadline and a shutdown lasts longer than two weeks, loans through Maryland’s new program would be disbursed, according to a state Labor Department spokesperson.
Similar to unemployment benefits that max out at a few hundred dollars, current plans are to provide $700 loans per individual, the spokesperson said.
Federal civilian employees who are furloughed without pay — who can receive unemployment benefits because they would not be working — are not eligible. Neither are employees of federal contractors, who, unlike direct employees, are not guaranteed back pay after a shutdown ends. Maryland residents who work in Washington, D.C., or elsewhere also would not be eligible.
It’s unclear how many people that would leave and how much it would cost the state, at least temporarily.
During the 2018-19 partial shutdown, about 1,500 federal civilian workers in Maryland were paid unemployment benefits for a total of about $2 million, according to state legislative fiscal analysis in 2019. Because about half of all federal civilian employees nationally were eligible for unemployment benefits, it was estimated that the Maryland loan program could apply to about the same number of workers and cost a similar amount of money.
While that 2019 analysis estimated startup costs would total about $212,000 for the first few years, the contract before the state spending board this week is for $635,481. The process for the emergency procurement began in mid-August, when Maryland officials anticipated a shutdown could be “imminent,” according to the board’s agenda.
The vendor, the Missoula, Montana-based Submittable Holdings Inc., has started creating an online application portal and developing systems to conduct identity and eligibility verification, provide customer support and collect loan repayments, according to the department.
Funding for the loans themselves will be pulled from the Catastrophic Event Fund, which maintains reserves in the case of natural disasters.
Before the Oct. 1 shutdown was averted, Democratic Gov. Wes Moore’s administration had also pledged to use around $1 billion of the state’s $5 billion cash balance to cover state-run services and state employee salaries that are funded by the federal government.
Officials also warned that if a shutdown lasted several weeks, resources would need to be prioritized.
The short-term plan was also contingent on getting reimbursed once funding was approved in Washington.
For the new loan program, workers’ repayment would be due 45 days after the shutdown ends. Loans not paid after 135 days would be forwarded to a collections unit and assessed a 17% fee.
Feldmark, whose 2019 bill authorized the program now being set up, said the idea was to “mirror” unemployment benefits, while at the same time hoping federal lawmakers would eventually make the targeted employees eligible for those benefits anyway.
“I hope that Congress is able to get their act together and keep the government open,” Feldmark said. “But if they can’t, our priority is making sure that we’re doing what we can to help Maryland residents though that.”
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