Guidance on Federal Government Shutdown


CapitolUpdate: Oct. 17, 2013, 8:47 a.m. - After a sixteen day federal government shutdown, Congress passed a short-term continuing resolution for FY 2014 and increased the debt ceiling which would have been breached on October 17 without federal action. The new law, signed by President Obama late in the evening of October 16, provides federal appropriations through Jan. 15, 2014 and raises the debt ceiling through Feb. 7, 2014. Based on a bipartisan agreement by Senate Majority Leader Harry Reid (D - NV) and Senate Minority Leader Mitch McConnell (R-KY), appropriations for FY 2014 are provided at FY 2013 levels and include sequester. The 35 page law includes other provisions that will be of interest to states. This includes:

States will be reimbursed with interest for expenses that would have been paid by by the federal government during the shutdown including compensation for the cost of compensating federal employees.  The provision applies to any period of FY 2014 with a lapse of federal funding and not limited to the time in October 2013 when the federal government was closed. 

  • Furloughed federal workers will be paid.
  • Temporary Assistance to Needy Families  (TANF) block and the Child Care Development Block Grant are reauthorized through Jan.15, 2014.
  • Low Income Home Energy Assistance (LIHEAP) formulas to distribute funds to states remain unchanged so the same formula can be used as in FY 2013.
  • Refugee and Entrant assistance is obligated at a rate to allow for the increase of unaccompanied minors.
  • The Department of Transportation may provide for the Colorado Flood damage under the emergency relief program under the federal highway administration.
  • The Veterans Administration is given funds to reduce the backlog of disability claims.
  • Income verification rules for Americans accessing new health insurance exchanges created by the Affordable Care Act are tightened.  All individuals applying for premium tax credits or cost sharing subsidies must have their eligibility verified.
  • Border security operations and staffing levels and the immigration and custom enforcement staffing and activities at the Department of Homeland Security are specifically sustained.
  • A process is created for dealing with potential default of the debt ceiling.

There was also agreement to convene a budget conference committee, which is to report by Dec. 13, 2013.

Update: Oct. 16, 2013, 10:34 a.m. - According to Senate sources, Speaker Boehner (R-Ohio) has agreed to allow a vote on the emerging Senate bill to raise the debt ceiling and reopen the government. As soon as the language is completed, the House is expected to act first on the bill to limit procedural hurdles in the Senate. The draft of the Senate agreement would raise the debt ceiling until Feb. 7, reopen the government until Jan. 15 and form a budget conference to resolve the automatic spending cuts under sequestration.

 Update: Oct. 16, 2013, 9:13 a.m. - Now the biggest concern may not be how to find agreement on a continuing resolution (CR), but rather what will happen if the debt limit is breached, most likely October 17. Several legislative proposals have been floated in recent days, none of which currently have the support to pass both chambers of Congress. The policy landscape changes minute to minute. Currently Senate Leaders Harry Reid (D-Nev.) and Mitch McConnell (R-Ky.) are hammering out a bipartisan deal to reopen the federal government by passing a continuing resolution through January 15 and by raising the debt ceiling through February 7.  House Speaker John Boehner (R-Ohio) attempted to put together a similar proposal with several amendments to the Affordable Care Act; those efforts fell apart.  Possible next options? Look to the Senate to pass the Reid-McConnell "deal."  What the House does next is unclear. There will be votes on the House floor tonight or tomorrow morning.  Earlier, House Budget Chairman Paul Ryan (R-Wisc.) introduced a six-week debt limit increase of $118 billion achieved through spending cuts, including tax and entitlement reforms. Another widely discussed plan comes from Senator Susan Collins (R-Maine). It would end the shutdown through a six-month CR and extend the debt limit until January. The proposal includes a  two-year delay of the medical device tax and offers sequestration flexibility to federal agencies. A growing bipartisan group of senators, including Collins, Manchin (D-W.Va.), Landrieu (D-La.),  Ayotte (R-N.H.) and Pryor (D-Ark.), McCain (R-Ariz.), Klobuchar (D-Minn.), King (I-Maine), Murkowski (R-Alaska), Heitkamp (D-N.D.), Donnelly (D-Ind.), Johanns (R-Neb.) and Kirk (R-Ill.) have been working together to find a compromise. 

At this point, there are countless moving parts in a possible agreement, including policy provisions and time frames on the debt limit and a stopgap spending plan. The impact on states from these plans would come from modifying the reductions from sequestration, changing the discretionary caps in the Budget Control Act, adjusting several elements in the Affordable Care Act and making changes to the federal tax code. The effect on states from the closure of the federal government will worsen as programs run out money that states can no longer afford to make up.   

NCSL will continue to provide more news on the impact and effects the government shutdown will have as information becomes available. The resources in the box on the right side of the page can offer further information and guidance in the event of a shutdown.

Oct. 1, 2013: At midnight on Tuesday, Oct. 1, the federal government shut down for the first time since 1996. Without legislation to provide appropriations, the federal government cannot make or authorize an expenditure nor authorize an obligation under any appropriation or fund. Federal agencies continued operations and activities that were essential to national security, the safety of human life and property, among others. As entitlements are not funded through the appropriations process, programs such as Medicare, Medicaid and Social Security continue to be funded, as mandated by law.