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Bay State braces for impact of funding interruption, cuts

A major concern is lack of aid for the neediest

WASHINGTON — Carolyn Federoff has a busy weekend. As a legal adviser for the federal Department of Housing and Urban Development, she is scrambling to process the paperwork for 27 apartments for low-income elderly residents in Winthrop.

If she doesn’t complete it by Tuesday, when a threatened shutdown of the federal government could begin, the housing project for senior citizens earning less than $13,000 a year could lose its funding. Not to mention that Federoff, along with 150 other HUD employees in Boston, could be furloughed without pay.

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Across Massachusetts and around the country, millions of people face losing government benefits ranging from heating oil to nutrition assistance, or delays in processing of Social Security claims and college loans, if Congress fails to reach a budget deal by Oct. 1 and forces a shutdown. Law enforcement, military, and other essential services would continue through a shutdown but virtually all other government functions would cease.

Already taking its toll is the distress felt by tens of thousands of federal employees in the Bay State suffering from a seemingly never-ending series of budget crises brought on by Washington fiscal battles. As many as 29,000 federal workers in Massachusetts could be furloughed without pay if a shutdown is not averted.

Federoff already has endured a 2 percent salary cut this year from across-the-board spending reductions known as sequestration. And lawmakers discussing a possible deal to avert a shutdown are only now considering a measure that would fund the government through Nov. 15, potentially setting up another showdown.

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“It is so tiresome,” said Federoff, who is also top officer for Local 3258 of the American Federation Of Government Employees. “It certainly does drive people to reconsider their career choices. There is a point in time where patriotism doesn’t pay the bills.”

Paying the bills in the event of a shutdown is a major concern for Massachusetts, which gets reimbursed tens of millions of dollars each week by Washington for a host of federal programs.

“The biggest impact would be on the state’s cash flow,” said Alex Zaroulis, communications director for Governor Deval Patrick’s Executive Office for Administration and Finance.

She specifically cited federal programs that help the neediest in the state that could see funding dry up, especially if a shutdown continued for a considerable period. Among them would be Temporary Assistance for Needy Families, a block grant that helps move welfare recipients to work, she said, as well as the Supplemental Nutrition Assistance Program and the Low Income Home Energy Assistance Program, a key program for low-income families as cold weather approaches.

Another threatened program is Head Start, which serves more than 16,000 children at day-care centers across the state. Any funding cuts would be on top of reduction because of sequestration, which has already removed more than 2,000 low-income children from the program this year.

Senator Edward J. Markey, a Massachusetts Democrat, said in an interview that a government shutdown, especially one on par with 1995-1996, when the federal government was closed for nearly a month, will affect thousands across the Commonwealth. He cited the 29,000 federal workers facing unpaid furloughs.

“That is no small number of families,” he said.

But he said he is particularly concerned about the most vulnerable who rely on a series of federal assistance programs.

“They are the ones who are impacted most,” Markey said, “because they have the smallest margin.”

Markey and his Democratic counterpart, Senator Elizabeth Warren, urged colleagues on Friday to ensure the home heating program is protected in the upcoming budget negotiations.

The funding “is essential to making sure families who are struggling to make ends meet can heat their homes and stay safe,” Warren said in a statement. “This doesn’t make any sense.”

But a whole range of government services are expected to be cut, curtailed, or delayed if Congress can’t agree by Tuesday on a new appropriations bill, from the processing of Social Security benefits and college loans to federal contracts and loans that support jobs and feed the local economy.

While benefit checks are expected to keep arriving, nearly 200,000 Massachusetts residents who depend on Social Security could find no one at the other end of the phone if they need assistance.

A government shutdown would immediately close all 15 of Massachusetts’ national parks, including John F. Kennedy’s birthplace; the Adams National Historical Park; Salt Pond Visitor Center on Cape Cod; and Minute Man National Historical Park.

These sites drew about 10.5 million visitors last year and accounted for $432 million in visitor spending in 2011, according to the National Park Service.

Local universities are also bracing for the potential impact of a shutdown on students who are dependent on federal education loans.

While federal education aid is already in place for students this semester at Northeastern University, the university is still planning for the worst.

If a shutdown lasts long enough, federal aid for more than 14,000 students at Northeastern would be stopped, according to Anthony Erwin, dean of student financial services. At that time, “we would certainly use all of our resources to make sure the students were held harmless.”

Yet Markey’s office warned on Thursday that things could get difficult in other ways for students, including a halt to work-study scholarships that are utilized by 42,000 students across the state.

The last time the government was shut down, in late 1995 and early 1996, impacts were felt across a number of economic sectors across the country, according to a recent analysis by the nonpartisan Congressional Research Service. For example, more than 20 percent of government contracts were put on hold, affecting both large defense companies and smaller federal contractors.

In 2012, more than 5,000 Massachusetts companies received approximately $16.7 billion on federal contracts, according to the state. A halt to government operations similar to two decades ago would affect more than 1,000 Bay State businesses — using the same 20 percent benchmark — resulting in furloughs. Unless companies decide to pay contract workers out of their profits, workers are likely to lose those earnings.

Another drag on the economy, meanwhile, would come from a halt in small business loans. In the past year Massachusetts banks made more than 2,000 loans worth $602 million that were subsidized by the federal Small Business Administration.

“A shutdown would put a stop to this critical source of small business credit until the government resumes operation,” Markey said.

Government services for the state’s 394,000 veterans also could be curtailed, including processing of new educational benefits and pensions.

The perennial victims of the ongoing brinkmanship between the political parties over spending are the majority of men and women who work for the federal government.

For those like Federoff, it feels like the leaders in Washington unwilling to compromise actually want government to go away.

“Many of us believe there is an element in Congress who want government to be broken, who don’t want government to work,” she said. “So, when it’s broken, they can say, ‘You might as well dismantle it.’ ”

Bryan Bender can be reached at bender@globe.com. Follow him on Twitter @GlobeBender
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