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Federal shutdown staring to ripple through states

By David Lieb

Associated Press

LAST UPDATED: 07:53 a.m. HST, Oct 12, 2013

JEFFERSON CITY, Mo. >> The federal government shutdown that has idled hundreds of thousands of workers is starting to ripple through states, which are now laying off employees and warning of thousands of additional furloughs if the budget stalemate is not resolved soon.

The trickle-down effects highlight the extent to which states are dependent on the federal government. In many states, federal money comprises about a third of all revenues. As federal dollars dry up, so do state programs.

Across the nation, about a dozen states already have furloughed hundreds of employees whose paychecks depend on federal money. The layoffs have hit civilians at state National Guard bureaus, workplace safety inspectors and state workers who determine eligibility for Social Security disability benefits, among others.

More state employees could be furloughed this coming week.

"For me, it couldn't have come at a worse time," said Tammy Turner-Lee, a 54-year-old supervisor in Oklahoma's disability determination office who is targeted to be furloughed on Friday. "My husband is going through chemotherapy right now. ... If we are in furlough status, that means I am going to have to go into credit card debt."

Medicaid, the biggest federally funded state program, has remained exempt from the cutbacks. But federal officials have said other big state-administered programs -- like food aid for low-income families -- may have only enough money to make it through October.

As Congress and President Barack Obama remain at odds over the federal budget, some states have started to prepare for widespread furloughs.

Arkansas already has laid off 673 employees and could furlough an additional 4,000 if the federal shutdown continues for another week.

"The state of Arkansas simply does not have the resources to continue to cover the costs of federal programs," Arkansas Gov. Mike Beebe wrote in a recent memo to agency directors.

Some states have avoided furloughs by tapping into accumulated federal funds while others are dipping into state coffers.

Maryland has continued to pay 11,000 employees because the Legislature set aside $100 million to plug holes created by federal budget battles. Kansas Gov. Sam Brownback dipped into cash reserves to avoid 119 furloughs and reinstate dozens of others in an office that handles unemployment benefits.

But Florida Gov. Rick Scott took the opposite approach, ordering agencies not to use state money to cover typical federal expenses.

Furloughs of state workers are slowly mounting. There have been 56 so far Maine, more than 100 in Illinois, 244 in Arizona, more than 300 in Virginia and over 400 in Washington.

The disability office in Oklahoma's Department of Rehabilitation Services, where Turner-Lee works, halted its outgoing mail to stretch its dwindling federal dollars. But furloughs could kick in by week's end for 289 full-time and 39 temporary state employees.

The Oklahoma shutdown would affect nearly 18,000 people waiting for word on whether they can get disability benefits.

The entire staff of the Maine disability determination office already has been furloughed, meaning people with disabilities "are going to incur additional financial hardship," said Sara Squires, the public affairs director at the nonprofit Disability Rights Center in Augusta, Maine.

Other states such as Pennsylvania, Missouri and Michigan still are bracing for a big hit from the federal shutdown.

About 200 maintenance employees of the Missouri National Guard already are furloughed, but the state has several thousand additional federally funded employees.

The key date in Michigan in Oct. 20. If nothing is resolved by then, state officials will begin reviewing which 15,000 to 20,000 employees to furlough.

"If we are still in the same position a week from now, we've got some very real problems and concerns," said Kurt Weiss, a spokesman for the Michigan budget office.

Furloughed federal workers could eventually get paid if Congress later approves retroactive wages. But state workers dependent on federal funds could face complications because of quirks in local laws or collective bargaining contracts.

In Minnesota, some 100 Department of Health workers have received notices warning they may be laid off. So have 67 employees of the Minnesota Department of Military Affairs.

Having been through a state government shutdown two summers ago, Chad Olson, lead electrician at an Air National Guard base in St. Paul, said he'd be inclined to look for a new job if he winds up on indefinite furlough again. "I can survive, but I don't want to put myself in a position where I can't survive," Olson said.


Associated Press writers Brian Bakst in St. Paul, Minn.; Andrew DeMillo in Little Rock, Ark.; David Eggert in Lansing, Mich.; Gary Fineout in Tallahassee, Fla.; John Hanna in Topeka, Kan.; and Brian Witte in Annapolis, Md., contributed to this report.

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CriticalReader wrote:
THIS is "trickle down" economics.
on October 12,2013 | 08:33AM
RichardCory wrote:
Get back in your grave, Zombie Reagan!
on October 12,2013 | 10:18AM
alaskaguy wrote:
Correct the misspelling in your headline, please.
on October 12,2013 | 09:34AM
Kuniarr wrote:
What exactly does the SA mean by staring to ripple? It should have been starting to ripple
on October 12,2013 | 09:35AM
CriticalReader wrote:
Does't "ripple" only apply to the surface of liquid environments and some sort of hillbilly libation?
on October 12,2013 | 10:23AM
Obviously NOT!
on October 12,2013 | 12:29PM
noheawilli wrote:
Seems to me that we can get along just fine without dept of commerce, labor, education, energy and the EPA. While we are at it lets save some more money by closing the NSA and the TSA.
on October 12,2013 | 11:19AM
HD36 wrote:
They'll raise the debt ceiling for the 50th straight time so that the government can borrow more money. Unfortunately, this is the worst thing they could do. There is no mathematical way the government can pay this money back. Either we print money and devalue the currency or we declare a default. The later would be alot better. If you get back 50 cents on the dollar from a default it's better than getting all your money back but the purchasing power went down 80%. It's better to rip a bandaid off fast than slowly peal it off. It's better to go through some short term pain and take our medicine than to deny the source of the problem and make it much worse. You can't solve a problem of too much debt by more debt.
on October 12,2013 | 01:04PM
Ratrase wrote:
"...if you get 50 cents on the dollar from a default it's better than getting all your money back but the purchasing power went down 80%...... What? Does that make any sense at all to anybody else?
on October 12,2013 | 01:40PM
HD36 wrote:
Look up the effects of inflation. Expansion of the money supply is by definition inflation. The Federal Reserve is buying $85 billion a month, expanding the money supply.
on October 12,2013 | 01:43PM
HD36 wrote:
Raising the debt ceiling pertains to paying back bond holders, those who bought US Treasury Bonds. By raising the debt ceiling, we can borrow more money to pay back bond holders. We borrow more money by printing digital money from the Federal Reserve which buys the bonds which allows the government to spend more. More than 80% of bonds are now bought by the Federal Reserve not by foreignors or domestic private institutions. Still about half of the debt is owned outside this country. Should we cut social security, medicare, foodstamps, federal pensions, etc. in order to pay back foreignors the money they lent us or should we just default and tell them they get 50% on the dollar or less? That option would be the best for Americans. But, the road we are heading towards is to monetize the debt, (print money) pay everybody, everything, not cut a thing in spending, and watch the currency collapse. The result will be that a dollar now purchases a lot less than it did befoe the currency debasement fiscal policies. This option hurts everyone, especially the poor and middle class. The rich would hardly feel it.
on October 12,2013 | 04:33PM
CriticalReader wrote:
Raise tax rates on the highest brackets, and current spending is offset to create a current surplus, and the process of eliminating debt can take place.
on October 12,2013 | 06:07PM
HD36 wrote:
Nice. The US has already defaulted once. In 1971 Nixon closed the gold window and screwed foreign dollar holders. Since then the national debt has climbed over $17 trillion. Add in unfunded liabilities, social securtiy, federal pensions, etc.. and the total debt is well over $75 trillion. Tax all millionaires 100% and cut government spending by $1 trillion a year and we still wouldn't come close to balanced budget. The game is too large to stop. The con is coming to an end, and confidence in the dollar is ending.
on October 12,2013 | 07:18PM
Bumby wrote:
The time is now for all Americans to say stop all this nonsense of increasing our debt. The more debt we have as a nation the worst we will be going forward. It will hurt the future generations. The tax structure needs to be calobrated and more needs to be paid by those earning $1 million or more. The U.S. Gov't needs to go on a fast (financial fast) to get our economy back on the right track forever. All Americans think about the logic. If you as an individual, a family, a business, did not have any loans and had a positive cash flow, would you be better off financiall?
on October 12,2013 | 09:12PM
HD36 wrote:
I think it's too late. Just out of Bejing China: " The world needs to deAmericanise itself from this hypocritical government which has shifted the financial risk of default overseas" It is time for a new world order with a new reserve currency. China will be implementing an alternative dollar trading platform. With no demand to hold dollars in reserve, foreign countries would exchange them and return to sender. Imports will go up, the trade deficit will widen further, and we'll have massive shortages. I hope we can keep it together for 1 more year.
on October 12,2013 | 09:39PM
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