Government Shutdown Likelihood: High

April 6, 2011 | By Liza Casabona | 1 comment

Government funding runs out Friday, and despite indications that talks over the fiscal year 2011 budget continue, it’s looking more and more likely that a shutdown is unavoidable. Meetings between budget negotiators on the Hill and administration officials continued today, but members of both parties talked about the intractability of negotiators on the other side of the aisle.

Since it seems all but inevitable, what would a shutdown look like? According to senior administration officials, any federal activity that receives funding from a source other than the federal government, has multiyear appropriations or permanent appropriations would be able to keep running, because they can draw money from one of those alternative pools. Services that are deemed essential for “safety of life and protection of property” will also continue.

Everything else falls into a massive grey area. Federal agencies have been instructed to start determining what functions fall into the exception categories and to prep everything else to be shut down this weekend.

The shutdown impacts everything from the obvious to the obscure. On the lighter side, if a shutdown occurs, national parks and the Smithsonian Institute would shut down and there will be no Cherry Blossom Festival parade in Washington, D.C., this weekend.

But a shutdown would also suspend a number of more essential functions, including: Small Business Administration loans and loan guarantees; Internal Revenue Service processing of paper tax filings (although electronic filings would keep running) at the height of tax season; and new loan guarantees from the FHA during the peak home-buying season.

The 1995 shutdown furloughed approximately 800,000 employees. OMB said that a shutdown later this week would probably impact about the same number of people.

Even those activities that are deemed “essential” aren’t immune from the ramifications of a shutdown. Department of Defense employees and military personnel considered essential under the “safety of life and protection of property” designation would continue to earn a salary, but with no money in federal coffers, wouldn’t actually get paychecks during a shutdown.

In reality, no one knows yet exactly how far the ripples from a shutdown of the federal government would extend. Until the agencies work out specifics, there are no concrete barriers, but it’s likely that many discretionary funding streams will be inaccessible.

What contingency plans is your organization making in the event of a government shutdown at the end of the week?


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