RICHMOND, Va. — A dismayed Gov. Bob McDonnell conceded Monday that a federal shutdown is just hours away and announced state safeguards against fiscal mayhem in Virginia — a state heavily dependent on Washington spending.
With Congress again unable to agree on a way to keep the government open, McDonnell has two options to ease the state’s crisis. His response depends on how hard the state is hit by discontinued federal funding for joint federal-state programs and how the unpaid furloughs of non-essential federal personnel affect state tax collections.
A new Federal Action Contingency Trust, or FACT Fund has about $13 million in reserve. It was created by the General Assembly in 2012 with just such a federal calamity in mind.
McDonnell can also allow state agencies that rely on federal money to continue operations using “authorized deficit loans.” The state treasury will make the loans, secured by pledged federal reimbursement whenever Washington gets its act together.
McDonnell didn’t bother concealing his disdain for both a Democratic White House and the U.S. House for paralyzing political brinksmanship. He faulted President Barack Obama for a lack of leadership and the House’s GOP leadership for a stunt intended to eliminate funding for the Obama-backed 2010 health care reform law.
“The president has failed to engage in any serious discussion with Republicans on entitlement reform, which everybody in the world knows is the key to getting our fiscal house in order,” McDonnell said. “At the same time, my Republican friends have got to understand that there’s no way on earth that the president and the United States Senate are going to vote to defund Obamacare.”
McDonnell, an opponent of the Affordable Care Act, said the initiative will ultimately collapse of its own cost and bureaucratic inefficiency, “but it is absolutely wrong to shut down the government and to threaten to shut down the government over this issue.”
“Shame on everybody. A pox on both houses for letting this happen,” McDonnell said.
More federal defense money flows into Virginia per capita than any other state with major military installations, including the Pentagon and the world’s largest U.S. Naval base at Norfolk.
Also, the federal government and federally-dependent contractors are a major employer in state’s economic bread basket, the Washington, D.C., suburbs of northern Virginia.
Of approximately 172,000 civilian employees of the Defense Department in Virginia, McDonnell’s administration estimated that as many as one-third could be subject to furloughs.
Essential federal services, including active-duty military, mail delivery, Medicaid and children’s health insurance programs, would not be affected by the shutdown. But discretionary federal spending such as national parks, some block grants and jointly funded social services programs and home weatherization initiatives, would be curbed until Congress reaches an agreement on reopening them.
McDonnell said the administration will know by Friday how extensive the fiscal blow will be to the state and which discretionary federal services Virginia will have to shoulder until a divided Congress can compromise. Congress has not passed a budget in 4½ years and kept the government operating through a series of continuing spending authorization resolutions.
“There are solutions. The primary solution is democracy and the ballot box. That’s how you resolve these issues,” McDonnell said.
The looming federal shutdown also dominated Virginia’s gubernatorial race.
Democrats, including gubernatorial nominee Terry R. McAuliffe, sought to tie Republican nominee Ken Cuccinelli to the tea party leaders who insist on using Monday’s vote to defund the Affordable Care Act. Chief among them is Sen. Ted Cruz, R-Texas, who waged a 21-hour, 19-minute filibuster against continued funding for conservatives call Obamacare. Cruz will campaign with Cuccinelli on Saturday.
Cuccinelli says he opposes a federal shutdown, but neither he nor his campaign will say — as McDonnell clearly did — whether Cuccinelli supports House Republicans’ continued demand that funding for the health reform law be stripped as a condition for passing legislation to keep the government open.
McAuliffe, a former Democratic National Committee chairman, supports the new health care law and expanding Medicaid in Virginia to about 400,000 working poor.
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