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A looming federal government shutdown has some Maine business leaders worried about the potential economic fallout for the state.
“Federal agencies touch many aspects of our privately funded work, from keeping air travel safe to setting fiscal policy,” Joshua Broder, CEO of Tilson, told Mainebiz. “A shutdown is unnecessary and reckless.”
The Portland-based provider of telecommunications consulting, design and build services has a national footprint.
“While Tilson isn’t dependent on direct federal spending, I’m very concerned about the impact of a shutdown of any length and urge Congress to do its job and not put the economy at risk,” said Broder, who was honored as a Mainebiz Business Leader of the Year in 2018.
His comments come as a Republican faction in the U.S. House of Representatives pushes for spending cuts that are opposed by many other members of the same party, raising the specter of the first government shutdown in five years. That limbo lasted a record 35 days, from Dec. 22, 2018, to Jan. 25, 2019.
Andrew Silsby, president and CEO of Kennebec Savings Bank, expressed frustration over Washington’s repeated political stalemates.
“Over the past few years, Congress keeps finding itself at an impasse on funding the government and that causes great disruption for the economy,” he said. “Shutdowns or even the threat of a shutdown creates unnecessary worry and speculation over which services are considered essential or not or if the people will have access to a service or not.”
Arguing that the government should never shut down, Silsby lamented the fact that funding "has become such a political football in recent years.”
“It’s OK to disagree on policy, but simply continuing to fund existing government services should never be interrupted,” he said. “I am hopeful that we can get to a better place with our political discourse to find a way to consistently fund the people’s business.”
To prepare its construction-industry members on what to know in the event of a shutdown, the Associated General Contractors of Maine issued a four-page brief on what companies should know and do.
The recommendations include establishing a protocol to track and account for all costs incurred in case of a shutdown and how to recover some costs once it ends.
“Our concerns are in the event of a longer shutdown, performance and therefore employment may be affected by non-contracting issues such as access to federal facilities or permitting requiring federal agencies,” said Kelly Flagg, executive director of the Augusta-based trade association.
“Assuming no agreement to fund the government is reached and it the federal government shuts down; AGC will continue to provide updates on construction-specific impacts or considerations concerning a shutdown,” Flagg said.
She also noted that shutdowns are of an undetermined duration, making planning and executing contract commitments extremely difficult for contractors.
“It creates insecurity for employees who don’t know if they’ll receive a paycheck or have work that week and makes commitments from vendors difficult,” she added. “Supply chain disruptions affect projects and ongoing uncertainty means that contractors can’t build their future work programs. All of these impacts have been seen in previous shutdowns and are of concern again today.”
Among large manufacturers, General Dynamics Bath Iron Works (NYSE: GD) in Brunswick does not anticipate any disruptions to its output in case of a shutdown.
The shipyard, ranked Maine's fourth-largest private employer in the 2023 Mainebiz Book of Lists, designs, builds and maintains combat vessels for the U.S. Navy.
“We don’t see any immediate impact on manufacturing,” said BIW spokesman David Hench.
On a wider scale, a shutdown would impact tens of thousands of federal workers in Maine as well as programs and services that are critical to Maine people and businesses.
Data from the U.S. Department of Labor show an average of 16,480 federal government jobs in Maine in 2022, including 6,390 jobs at the Portsmouth Naval Shipyard, 3,230 jobs at the U.S. Postal Service and 1,550 VA Hospital jobs. Those comprise two-thirds of the total, with public administration jobs in national security, courts and administration of federal programs making up the rest.
“There’s a direct impact on federal workers and their families,” said Kate Knox, a shareholder at Bernstein Shur who co-chairs the Portland-based law firm’s government relations practice group.
“Those workers won’t receive their pay, even if their jobs require them to continue working. And while programs such as Medicare and Social Security aren’t impacted, certain child care programs, the Supplemental Nutrition Assistance Program and the WIC Nutrition Program benefits [for women, infants and children] would be affected, meaning some families might not be able to buy the food they need or be able to go to work without child care. Environmental and safety programs and even SBA business loans would be endangered."
On top of those direct impacts, Knox said that the uncertainty around a shutdown and its duration “means that it’s difficult, if not impossible, for the state government and impacted businesses to make mitigation plans.”
She also noted that the state and federal governments are intertwined, “meaning the impacts of a government shutdown go much deeper than what most of us think of as federal programs.”