Federal budget

First shutdown payday arriving for many federal workers

dhanks@MiamiHerald.com October 9, 2013 

Ten days into a partial government shutdown, the cash squeeze is about to get real for thousands of federal workers.

Because of lags in pay cycles, many government workers have yet to actually see a reduction in their compensation. But as post-shutdown paydays arrive Friday for a large chunk of the federal workforce, government employees are bracing for a sudden drop in income.

“The biggest problem I have is that the bills are still there,” said Gwendolyn Ross, who works in the accounting department of the U.S. Coast Guard’s Miami Beach station.

She was sent home on an unpaid furlough last Tuesday once the shutdown began. She expects to get a direct deposit for six days of work — through Sept. 30 — and no money for the four days of the pay period that began Oct. 1, the first day of the shutdown.

“That’s substantial,” Ross, who lives in Homestead, said of the 40 percent cut in her pay. “I either have to take out a loan, or use my savings. In Florida, that’s not a good idea, because you never know when a hurricane may hit.”

Ross’ cash-flow squeeze helps illustrate the consequences of the ongoing impasse over spending in Washington. While Ross and other workers were caught up in the shutdown, they still haven’t felt the full brunt of it.

The Office of Management and Budget said in a statement that the two-week paychecks for many civilian employees on Friday will reflect only the work they did in the last week of September, before the shutdown. Not all workers get paid on the same day, but Friday is a payday for many of them — and it will mean partial paychecks.

For workers affected by the shutdown’s halt in funding, “their pay will only cover 9/22-9/30, whether they are excepted or not,” OMB said in an emailed statement. The “excepted” workers, who used to be called “essential,” are those whose jobs have been deemed necessary to protect life and property.

The Defense Department over the weekend reinterpreted its rules on essential workers to include most of its furloughed civilians, meaning 350,000 of the original 800,000 federal employees sent home without pay were being brought back to their jobs. At Doral’s Southern Command military headquarters, a spokeswoman said almost all of the 100 furloughed civilians were back at their posts this week.

The shutdown began when House Republicans declined to maintain existing spending levels past Oct. 1, the end of the government’s budget year. While GOP leaders pushed for changes or delays in President Barack Obama’s healthcare program in exchange for a funding bill, Democrats and the White House refused to bargain.

There were some mildly encouraging signs Wednesday: Congressional leaders on both sides met to discuss possible resolutions, as business groups — including the National Retail Federation — step up pressure on the GOP to relent. Obama invited all 232 House Republicans to meet with him in the White House on Thursday, and the GOP sent word that 18 would attend.

The Republican-led House has passed several bills to resume funding for various government functions, including disease research and veterans programs. But the Democratic-led Senate has rejected the piecemeal approach. Meanwhile, the Obama administration and business leaders are warning of a potential catastrophe if Congress doesn’t vote by Oct. 17 to extend the nation’s borrowing limits.

Late in the day, came news that House Republicans may be willing to lift the debt ceiling without ending the shutdown. The Associated Press reported House Republican leaders are considering a short-term increase in the nation’s debt limit as one way out of an impasse that threatens the nation with an unprecedented financial default.

These officials said there is less urgency among GOP leaders about ending a partial shutdown of the government, now in its ninth day, according to the AP report.

For most government workers, the impasse shouldn’t mean lost money even if they are on furlough or working without pay.

Republicans and Democrats have agreed to eventually pay furloughed employees for missed days of work, and the government is obligated to eventually reimburse employees for all non-pay work days during the shutdown.

Until those reimbursement checks arrive, employees would need to rely on cash holdings to make up any shortfall between their last paycheck and current bills.

At the Miami Federal Credit Union, headquartered in downtown’s Claude Pepper Federal Building, executives rolled out a special “Furlough Relief Loan” that lets a worker borrow up to $3,000 interest-free for 60 days. An interest rate of 12 percent kicks in after two months, but the union said the loan is designed for workers to pay off the balance “when Congress gets over this nonsense” and reimburses workers for lost pay, said Athan “Buster” Castiglia, the credit union’s president.

As of Thursday morning, Castiglia said about 30 federal workers had applied for the loan this week. One woman earning about $55,000 a year told Castiglia she does not have enough reserves to go very long without pay.

“She has her light bill, the mortgage on her house,’’ Castiglia said. “She’s one of the mass of people in the United States that are living one paycheck away from the street. All you need is something like this.”

Pay cycles differ for employees, and the logistics of actually receiving the money can vary. Ross said she expects her direct-deposit payment to arrive in her bank account on Tuesday.

For Nabil Salem, a translator who works for federal courts in Miami, the shutdown brought an immediate drop in assignments. “I got two calls last week instead of 20,” he said. That will mean a big decline in revenue once his paycheck arrives Friday.

“You cut down on your groceries, eating out, and anything that’s related to entertainment,’’ said Salem, an Arabic speaker who works in both criminal cases and for immigration hearings, which have been suspended. “I spend more time at home.”

The Public Insight Network assisted with this article. It is an online community of people who have agreed to share their opinions with The Miami Herald and WLRN. Become a source at Miami Herald.com/insight. This report was supplemented with information from Bloomberg, The Associated Press and McClatchy’s Washington Bureau.

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