The Issue: Federal government shutdown cascades down to states

The partial shutdown of the U.S. government is trickling down to the states, forcing them to curtail services and furlough employees, just like the feds.

Hurting the most from the shutdown that began Oct. 1?

Virginia, Alaska and Alabama, a study released last week by the personal finance website WalletHub indicated.

Virginia and Alaska have a large number of federal workers and Alabama has among the nation's highest number of seniors, the study said.

"From senior citizens who can't obtain the Social Security money they depend on for survival to students who are unable to secure the loans they need to pursue higher education, the unintended consequences of these nonsensical political games will continue to mount until we hit a breaking point," WaletHub said. "The question is whether the breakthrough will come in the form of a practical resolution to the standoff or irreparable damage to the country's economy and reputation?"

The study sliced and diced the effects of a drawn out shutdown in various ways: federal workers per capita, federal contract, small business owners seeking loans, senior populations, mortgage applications and federal student aid:

-- Most federal workers per capita: District of Columbia, Maryland, Alaska, Hawaii and Virginia, which the survey said are "disproportionately affected by the shutdown's immediate impact."

-- Most federal contracts per capita: District of Columbia, Virginia, Alaska, New Mexico and Maryland, "which means folks in those areas stand to lose out even if they don't technically work for the federal government," the survey said.

-- Small business owners looking for federal funds: North and South Dakota, Colorado, Alaska and Michigan are hurt most "by an inability to garner SBA [Small Business Administration] loans, as those states have displayed the highest small business borrowing rates in recent years," WalletHub said.

-- Most senior citizens per capita: West Virginia, Maine, Arkansas, Alabama and Vermont "should be particularly concerned about a prolonged shutdown," the survey indicated.

-- Delayed mortgage closings: Hawaii, Florida, Arizona, Maryland and Louisiana are the five states in which real estate "accounts for the greatest portion of gross product," results showed.

-- Disruptions to federal student aid programs: Georgia, Mississippi, Arkansas, South Carolina and Louisiana because those states "boasted the greatest number of [Free Application for Federal Student Aid] applications per capita during the third quarter of 2013," WalletHub said.

-- Most veterans per capita: Alaska, Virginia, Montana, Wyoming and Maine would "suffer most from a lack of VA funding, which could result from a drawn out shutdown," the survey said.

"Interestingly enough, while sick children and disappointed World War II veterans have only been able to prompt piecemeal funding proposals," WalletHub said, "the anger of key constituencies may just prove to be the impetus needed to break the congressional stalemate, particularly since Republican-leaning states stand to be hit disproportionately hard by a prolonged shutdown."

More than 800,000 federal employees were furloughed when the government shut down because of the impasse over passing a continuing resolution as a temporary funding measure.

Illinois Gov. Pat Quinn last week indicated hundreds of additional state workers could be temporarily laid off if a resolution to the federal government shutdown doesn't come soon, the Chicago Tribune reported. The state already has issued temporary layoffs to about 100 federally funded state employees.

Quinn sent a letter to Republican U.S. House Speaker John Boehner, urging him to "listen to the American people" and end the impasse.

The state workers who could be laid off hold jobs with paychecks, including workplace safety inspectors and caretakers for people with disabilities, the Tribune said.

"This dysfunction is bad for our state and our economy," Quinn wrote. "The common good of 13 million people in Illinois is at stake."

The federal government shutdown forced Washington's Employment Security Department to furlough hundreds of state workers last week, The Seattle Times reported.

In a twist, the laid-off workers must file for unemployment benefits from the same agency that temporarily laid them off.

Besides the 418 furloughed state employees, hours were reduced for 450 employees because of the federal shutdown, Employment Security spokeswoman Sheryl Hutchison said.

The agency, which gets 87 percent of its funding from the federal government, is using state dollars to pay the staff needed to keep processing unemployment claims, she said.

"We figure we can keep going with the state funds for a few weeks. If we go on for a month, we'll have to re-examine that," Hutchison said.

Adding insult to injury, the state workers likely won't receive back pay.

"Under the state constitution there's a limitation of the gifting of funds for work that was not performed," Hutchison said. "So our ability to reimburse state employees retroactively is in question."

The Veterans Benefits Administration furloughed 7,000 workers nationally and closed its regional offices in Seattle and 55 other cities, the Times said.

In what it calls a "field guide" to the shutdown, the Department of Veterans Affairs said claims processing and payment in compensation, pension, education and vocational rehabilitation programs are expected to continue through late October.

However, the VA warned, "in the event of a prolonged shutdown, claims processing and payments would be suspended when available funding is exhausted.

The Baltimore Sun reported last week that state workers were busy processing federal workers' jobless claims.

Furloughed federal workers have filed more than 16,000 unemployment applications, more than four times the number typically received from that employment sector in a year, officials said.

Many workers feel their futures are clouded with uncertainty, said Rita Pyle, president of Local 3302 of the American Federation of Government Employees.

"They're naturally concerned about pay and they're also concerned about their creditors," Pyle told the Sun.

The union represents employees in Social Security Administration field offices in the Baltimore region.

"We've been hearing conflicting stories," Pyle said. "Even though they say they're going to be paid, there's no budget yet."

The Sun said the unemployment insurance application figures for federal employees don't count government contractors and other private-sector workers who might have suddenly become unemployed because of the shutdown.

Meanwhile, the president of the United Mine Workers last week warned union members that federal safety inspections have been significantly curtailed and urged coal miners across the country to call their elected officials and demand an end to the government shutdown, The Charleston (W.Va.) Gazette reported.

"The government's watchdog isn't watching," UMW President Cecil Roberts said after the deaths of three coal miners in West Virginia, Illinois and Wyoming were recorded after the shutdown began.

"The circumstances surrounding each of these fatalities are different, and I do not want to draw immediate conclusions as to their causes based on incomplete evidence at this time," Roberts said in a statement. "But it is extremely troubling that within a week after the federal government shutdown caused the normal system of mine safety inspection and enforcement to come to a halt, three miners are dead."

"While details are still forthcoming about this and other mining fatalities we've suffered in recent days, I cannot help but to express my deep frustration ... that has furloughed MSHA [Mine Safety and Health Administration] inspectors and prevented them from conducting the regular inspections that make sure coal companies are operating their mines as safely as possible," Rockefeller said.