Journal Record: ‘A grinding halt’: Effects of government shutdown widespread in Oklahoma

The Journal Record - Journal Record Staff

Ripples from the federal government shutdown continued to spread across Oklahoma this week, with effects ranging from canceled airplane sales to home loan approval delays to court stays.

“We’re staying pretty busy because people are still sending documents to prepare and ordering title searches, but they’re just piling up while the FAA is closed,” said Lori Griffin, document manager at Insured Aircraft Title Service Inc. in Oklahoma City. “That means no outstanding lien searches, no file records, no way for plane ownership to change hands. … It’s all come to a grinding halt.”

Insured Aircraft Title normally handles about 15 sale closings per day worth millions of dollars. The company also orders 20 searches per day, which are now impossible because government websites have been switched off. Much of what the title company does requires approval by the Federal Aviation Administration.

Unreturned phone calls and nonresponsive online search engines are currently the norm. For example, at U.S. Attorney for the Western District of Oklahoma Sanford Coats’ office, where several staff members have been furloughed, telephone calls to spokesman Bob Troester were met with a recorded message: “Due to the lapse in government appropriations we are unable to return your call.” Once funding had been restored, Troester said, telephone calls would be returned.

Restoration is uncertain as the federal shutdown of all noncritical operations entered its second week with no end in sight. In fact, the showdown over defunding the Affordable Care Act is escalating as House Speaker John Boehner ruled out any measure to boost borrowing authority without concessions from President Barack Obama.

On Oct. 17, the U.S. will be unable to borrow money to pay its bills unless Congress raises the so-called debt ceiling. The current debt limit is $16.7 trillion – that’s trillion with a T followed by 12 zeros – which is no longer sufficient to pay off expenses such as Social Security and Medicare checks. Financial experts said failing to raise the cap will affect credit flow worldwide, to say nothing of the domestic disaster.

In the meantime, some processes are limping along on a case-by-case basis. For example, a message on the website of Oklahoma City’s federal court said judiciary work will continue at least halfway into the month before officials need to review the situation.

“In the event of a government shutdown on October 1, 2013, the federal judiciary will remain open for business for approximately 10 business days,” according to the website. “On or around October 15, 2013, the judiciary will reassess its situation and provide further guidance. All proceedings and deadlines remain in effect as scheduled, unless otherwise advised.”

Federal Court Clerk Robert Dennis said the courts’ operation will continue normally until the Oct. 15 deadline. However, because the Department of Justice has furloughed most attorneys who handle civil matters, Dennis said stays were issued in all federal civil cases until normal funding resumes.

At the U.S. Department of Housing and Urban Development offices in Oklahoma, spokesman Jerry Brown said several processes handled by HUD have come to a halt. Stoppage means many prospective homeowners will have to reconsider their moving plans as the office of Single Family Housing will not endorse Home Equity Conversion Mortgages. The Federal Housing Administration will not review condominium projects or perform quality control reviews. Also on hold are the FHA’s Section 232 loans, which provide mortgage insurance for nursing homes, intermediate care and assisted-living facilities.

Oklahoma’s construction sector remains relatively untouched by the federal shutdown, industry leaders said, although that could soon change, especially for state road and bridge builders.

“That is why ODOT (the Oklahoma Department of Transportation) is carefully monitoring the situation,” said Bobby Stem, executive director of the Association of Oklahoma General Contractors highway chapter.

Contractors working federal contracts could face challenges with invoicing and payment, said Chris Burnett, president of the Associated General Contractors of Oklahoma building chapter and Nabholz Construction Services’ Southwest operations. Projects depending on federal funding or tax-credit programs could also be affected.

As the limited source of available federal funds tightens, Stem said he expects many construction projects and programs to slip on the priority list behind military, Medicaid and other vital operations.

That will be critical for industries involved in infrastructure development because the shutdown coincides with cold weather, making asphalt and concrete difficult to pour. That could affect dozens of state asphalt contracts scheduled in the next few months.

Delaware Resource Group, a subsidiary of Oklahoma City-based Busey Group, has extensive contracts with the Department of Defense. Three of those contracts, two with the U.S. Air Force and one with the Navy, were put on hiatus because of the shutdown. The stop orders forced the company to furlough about 30 percent of its workforce, but some of those employees are already being called back due to the federal Pay Our Military Act, which was signed into law Sept. 30.

“For us, we’re fine financially,” Chief Executive Phil Busey said. “It could reduce receivables by two weeks, and we’re paying the benefits for those employees, so if it were to go on for three or four weeks we’d have to make some staffing decisions. If they pay us for the whole month, all the employees would be made whole, which is what we’re hoping for.”

Chief Operating Officer Brian Busey said a lack of clear guidance on Congress’ intentions has led to a lot of time on the phone with elected officials to sort out the matter.

“We brought 20 or so folks back today,” Brian Busey said. “It’s trickling in. “(Republican U.S. Sen. Jim) Inhofe’s office has been great. His whole office has been supportive. (Republican U.S. Rep. Tom) Cole’s office has been very helpful too.”

For the Oklahoma City Veterans Affairs Medical Center, the shutdown won’t have an immediate effect for those receiving benefits because the agency has funding to continue processing claims for compensation, pension, education and vocational rehabilitation programs through the end of the month.

Clinics, VA medical centers and health services already have funding approved for 2014 and will remain open, spokeswoman Tara Ricks said. However, if the shutdown continues much longer, claims processing and payments in those programs will be suspended as funds are exhausted.

And at the aeronautics giant Boeing, the company may have to furlough some workers, although officials said they do not know yet whether Oklahoma City operations will be affected. Boeing is working on a contingency plan to maintain normal business operations, spokeswoman Meghan McCormick said in an email.

“While the company is working to limit the negative impact of the shutdown on customers and employees, we expect some consequences could emerge in the coming days, including limited furloughs of employees in some areas,” she wrote.

Specific details on those effects are being worked out, she wrote.

Although most of the FAA’s operations have stopped, officials said a contingency plan will allow air traffic controllers and other essential employees to continue working in order to maintain the safety of the nation’s airspace. If the furlough extends longer than a few days, the FAA will recall specific employees back to work to meet safety needs. Airport spokespeople at Will Rogers World Airport and Tulsa International Airport said travel has not been affected, although some traffic numbers are expected to decline slightly as furloughed employees make their own budget adjustments while waiting for paychecks to resume.

Online: The Journal Record