Like all states, Maine will face a drastic drop in critical federal funds this week if Washington can’t solve the debt ceiling stalemate by Tuesday.

Federal dollars that pay for highway construction, work orders at Bath Iron Works — the state’s largest employer — and an array of health care and food assistance programs for the poor could be delayed or halted if the ceiling isn’t raised.

In addition, many of Maine’s 14,000 federal workers could be ordered to stay home, with the exception of those whose jobs are considered vital for public safety, such as air traffic controllers at the Portland International Jetport and Coast Guard personnel. Employees of self-funding entities, such as the U.S. Postal Service, would also be unaffected.

State officials say they are getting little guidance from the federal government about which programs would be affected.

Maine could get by for a few days by borrowing money from its cash pool, but the state needs to develop a long-term plan of action, said Sawin Millett, the commissioner of the Maine Department of Administrative and Financial Services.

“If things fall apart between now and Tuesday night, we need to be prepared to react on a significant reduction in the flow of money to a number of programs rather than limp along day-to-day and hope that things will get better,” he said.

A shutdown of federal funds to the state would have a huge impact on the Department of Health and Human Services. Roughly a third of the department’s annual $3.4 billion budget is funded with federal dollars.

Its biggest program, Maine- Care — the state Medicaid program — provides health coverage for nearly 400,000 children and adults. The federal government pays two-thirds of that cost while the state pays the rest.

State funds can be allotted to programs such as Medicaid, so they could continue to operate until the state money runs out, said John Martins, a spokesperson for DHHS.

For example, there is enough state money to run Temporary Assistance for Needy Families, the welfare program, for about three months, Martins said. He noted that Maine is required to give those who receive public assistance a 30-day notice if their benefits are going to change.

The department also administers the federal government’s supplemental nutrition assistance program, formerly called the Food Stamps program, to about 250,0000 children and adults. Except for administration costs, the $31.6 million program is funded entirely by the federal government.

If federal funds dry up, the state has no money to keep the food assistance program going. Money would have to be allocated from the state’s General Fund, and the Legislature would have to authorize that spending.

“In general terms, a shutdown certainly would have significant impact on how we serve the people of Maine,” Martins said.

The challenge, he said, will be prioritizing services, figuring out what state funds are available and doing the necessary paperwork to release those funds sooner than anticipated.

But it’s hard to predict what would happen in Maine because nothing like this has ever happened before, said Charlie Colgan, a professor of public policy and management at the Muskie School of Public Service at the University of Southern Maine.

Colgan predicted that there would be a phased reduction in federal funds, rather than a sharp drop-off.

“It’s not a vertical drop,” he said. “It’s more like a long, very steep slope, and once we go over it, it will be very difficult to scramble back up.”

The damage to the economy would be enormous, Colgan said.

If the political stalemate lasts another week, he said, the economy will fall back into recession and the number of unemployed people in the United States will double by the end of the year.

State Treasurer Bruce Poliquin said he worries that the credit of the United States could be downgraded. That would also increase the cost of borrowing money for the private sector, municipal government and the state government, he said.

“The real risk to Maine isn’t a default,” he said. “That’s not going to happen. The real risk is a credit downgrade of our country.”

MaineToday Media State House Writer Tom Bell can be contacted at 791-6369 or at:

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