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Government shutdown appears likely

January 19, 2018 / Carolina Small Business / CDFI, Economy, Small Business

Congress has until midnight tonight to come to an agreement on a spending bill to continue funding the federal government for the remainder of the fiscal year. Back in December, a continuing resolution was passed that would keep the government funded at current levels, and that resolution is expiring tonight.

The House passed a short-term spending bill last night, but there are not enough votes in the Senate to pass. This would be a stopgap bill that would continue funding for programs at current levels until February 16, at which point Congress would once again have to come to an agreement for a final spending bill.

What does this mean for community development?

As the Opportunity Finance Network explains, future funding for Fiscal Year 2018 for critical programs, such as the Community Development Financial Institutions (CDFI) Fund,remain uncertain. The House Financial Services and General Government (FSGG) passed a bill that included $190 million for the CDFI Fund, a significant decrease from the Senate’s FSGG appropriation and Fiscal Year 2017 level of $248 million. Both the House and Senate FSGG included $500 million for the CDFI Bond Guarantee Program.

What’s next?

The major impediment toward final spending bill is the disagreement on immigration policies, specifically the Deferred Action for Childhood Arrivals, or DACA, program. Among the other hurdles is funding for the Children’s Health Insurance Program, also known as CHIP.

If there is no agreement and the government shuts down, all “nonessential” agencies will close– including the SBA, CDFI Fund, and others that are involved economic and community development. Employees of these agencies will be furloughed, which is a temporary leave without pay.  The Washington Post reports that 83 percent of workers in the US Treasury department, 87 percent of workers in the Commerce department will be furloughed. This means that any applications for SBA loan programs will not be reviewed until all government agencies are back in operation. In the last government shutdown in 2013, the SBA was unable to process 700 loan applications totaling $140 million, until the government resumed normal operations.

“Essential” agencies, like the IRS, TSA, Postal Service, Social Security, and others, will continue to operate, though some may have a limited staff and their employees may or may not be paid.

As mentioned above, Congress has until midnight tonight to reach an agreement.