Md. getting jitters over budget crisis 'Really worried' : The state has weathered the federal shutdown by using its own funds, but there is concern about what will happen if it lasts a few more weeks.


While thousands of federal employees and government contractors in Maryland are feeling the bite of the partial federal shutdown, the impact on other Marylanders and on state and local government appears to be spotty.

As the budget shutdown ends its third week tomorrow, the Clinton administration says the impact is spreading. But it varies widely from state to state.

In Maryland, the main impact has been the anticipation of dire consequences if the shutdown doesn't end soon. In most cases, the state is using its own funds when federal money runs out.

Although Kansas closed its unemployment offices Tuesday after running out of federal money to operate them -- the first shutdown in the 60-year history of the federal program -- Maryland offices remain open. Unemployment benefits come from trust funds and are not jeopardized, but the cost of running state unemployment offices is being held up by the budget impasse.

"We continue to trust that the federal government will reimburse us," said Eugene A. Conti Jr., Maryland secretary of labor, licensing and regulation. "We have the resources to go for another few weeks."

The shutdown has strained the state operation, as 25,000 federal workers have filed unemployment compensation claims in the last three weeks, more than doubling the 2,000 to 3,000 claims that usually arrive weekly.

Mr. Conti said there is one exception to the "business-as-usual" approach. About 160 Marylanders who get special assistance because their jobs were lost to overseas competition will see the aid dry up next week. Since the federal shutdown began, the state has put up $30,000 a week for assistance, but it won't repeat that after this week.

"They're going to be out in the cold," he said.

The state Department of Health and Mental Hygiene, which gets percent of its budget from the federal government, is using state funds to continue basic services.

"We still have a large amount of state funds left to our discretion at this point," said James P. Johnson, the department's budget director. Mr. Johnson said he expects the federal government to reimburse the state once it solves the budget crisis.

In Baltimore, the housing and health departments, the two agencies that rely most heavily on federal financing, have weathered the shutdown without much difficulty.

Although $460 million in federal Section 8 rent subsidies for poor people in private housing was withheld from the states in December, according to the Department of Housing and Urban Development, Maryland officials say there has been no immediate impact.

Baltimore's housing department had enough money available last month and early January to continue monthly rent subsidy payments for nearly 9,000 families, said spokesman Zack Germroth. But there will be severe consequences if the shutdown continues for another two weeks, he said.

"Clearly, it would have a dramatic effect," he said. "We would be hamstrung and have to withhold funding not only for our programs but also community programs."

The city could be forced to negotiate with landlords to avoid evictions if the Section 8 financing dries up, Mr. Germroth said. And numerous community programs, from drug counseling to rat eradication, would halt without continued federal support.

In Westminster, federal rent subsidies arrived via automatic wire transfer this month, but the administrator, Karen Blandford, is worried that a forthcoming routine subsidy renewal could get caught in the shutdown.

"We are pretending that the world is going on as usual, but I'm really worried," Ms. Blandford said. "I don't know of people's rents not being paid, but that could easily happen."

Baltimore's health department could be forced to furlough a couple of hundred employees working for its Healthy Start program, which counsels pregnant women, if the budget crisis continues. The program seeks to reduce infant mortality and the incidence of low birth weight babies by providing counseling on substance abuse, nutrition and prenatal care.

The shutdown also is likely to jeopardize the city's lead-abatement program, said Deputy Health Commissioner Elias Dorsey. The department has been drawing on a $6 million grant to pay contractors to remove lead paint, which can poison young children, from older homes.

About 75 percent of the health department's $140 million annual budget comes from federal grants and other aid, much of which is channeled through the state.

"So far, we haven't had a problem," Mr. Dorsey said. "But in the next day or so, we could."

With HUD and the Department of Veterans Affairs partially closed, the usual processing of about 3,500 mortgage guarantees daily has ground to a halt nationwide, officials in Washington say.

But many loans continue to go through, say Marylanders in the real estate business.

Lenders handle much of the VA and FHA loan processing, said Kathy Malone, who runs the Ellicott City office of Countrywide Home Mortgage Loans Inc. In some cases, loan settlements have been delayed because a key piece of information has been held up at the federal level.

"There's not a huge impact," said Linda Moreau, a real estate agent in Ellicott City. "But I think it could increase."

Jerry Bray, a colleague at American Properties Inc., described a couple of delayed sales that have cost the buyers hundreds of dollars in added settlement costs.

"Oh, man, it's horrible," he said.

Tuesday, the Environmental Protection Agency began shutting down its cleanup work at more than 1,200 hazardous-waste sites across the country, including 15 in Maryland. At two sites -- a landfill in Abingdon and a former wood-treatment plant in Federalsburg -- all work stopped because the EPA was the prime agency doing the cleanup, said W. Michael McCabe, the agency's regional administrator in Philadelphia.

At the others, the work is being handled by private parties or the Army Corps of Engineers in close consultation with the EPA. Without the federal agency's involvement, said Mr. McCabe, work probably will stop shortly.

"What that means is the risk of prolonged exposure will go on unabated," he said.

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