For the 22nd time since 1976, Congress missed the Oct. 1 deadline to complete its appropriations work, instead adopting a last-minute continuing resolution that funded the government through Nov. 17.
Newly elected House Speaker Mike Johnson has said he wants all 12 appropriations bills passed before the agreement expires. But another continuing resolution, or CR, will be needed for the House and Senate to agree on fiscal year 2024 spending levels. Reports suggest that House Republicans are supportive of a CR through mid-January or mid-April.
The challenge in striking a temporary spending deal is whether House Republicans, Senate Democrats and President Joe Biden can find some common ground.
Setting Spending Limits
Earlier this year, Congress and the White House agreed to set enforceable limits for both defense and non-defense discretionary spending for fiscal years 2024 and 2025 as part of the debt ceiling agreement in the Fiscal Responsibility Act (FRA, P.L. 118-5). The act also states that if a continuing resolution is in place on Jan. 1 of 2024 or 2025, the discretionary spending limits for that fiscal year would be automatically revised, according to the Congressional Research Service (see chart below).
(Figures for fiscal years 2024 and ’25, in billions of nominal dollars)
|+/- Original caps (% change)
|+/- Original caps (% change)
Note: Table shows base spending, excluding funding that would be exempt from budgetary enforcement. Source: Congressional Research Service.
How a Shutdown Affects Government Agencies
The longest shutdown in recent years was 34 days in 2018. Each agency has a contingency plan so that essential services continue, even if the agency isn’t being funded, along with mandatory programs such as Social Security, Medicare and Medicaid (though eligibility determinations in some cases would be suspended).
Some programs funded through advance appropriations would continue as well, including those created in the 2021 infrastructure bill and the Veterans Health Administration. And a 2019 law guarantees that furloughed federal employees will receive back pay once the shutdown ends.
What are some of the big-ticket items legislators need to be thinking about for their states and constituents? It’s a simple question, with a complicated answer.
For states that continue discretionary programs during a shutdown, the federal government has provided reimbursement in the past—but there is no guarantee.
Stay tuned for more.
Here is a look at how a shutdown could affect government services, by agency.
U.S. Department of Agriculture
A shutdown would force the closure of USDA Rural Development programs, the Natural Resources Conservation Service, and state and local Farm Service Agency offices. The Farm Service Agency would be unable to conduct essential functions such as sign-ups, acre reporting, and processing of payments, including loan applications. Funding for agriculture risk and price loss coverage programs, which safeguard farmers in the event of significant revenue or commodity price declines, would come to a halt. Some essential functions would continue, such as food safety and service inspections at meat processing facilities and certain inspections funded by user fees. USDA Secretary Tom Vilsack joined a White House press briefing about the effects on the agency’s programs should the government shut down.
Department of Commerce
The department anticipates retaining 1,256 of its more than 52,000 employees during a shutdown. Activities of the CHIPS Program Office and the CHIPS Research and Development Program Office would continue as they are not financed by current-year annual appropriations. The National Telecommunications and Information Administration would continue to perform research and engineering as well as its cooperation with state governments in building and operating a nationwide public safety broadband network.
Department of Education
The department’s major grant programs would continue to provide funds for schools and students during a shutdown. This includes Title I, Pell and IDEA grants, which are fully funded for the 2023-24 school year.
Student loan payments, which were suspended in March 2020, resumed in October. A shutdown could affect customer service for the student borrowers. The department says it has funds for “key” student aid operations for only “a couple of weeks.” An extended shutdown could shorten call center hours and create longer hold times. The Federal Student Aid office is also rolling out a new FAFSA form for the 2024-25 school year on Dec. 1. The FAFSA application is typically available on Oct. 1 and was already delayed by two months to accommodate the updates. An extended staff furlough could complicate the release of the new “Better FAFSA.”
Department of Energy and Federal Energy Regulatory Commission
A government shutdown would affect Energy Department offices disproportionately due to their reliance on multiyear and one-year funding sources. Notably, the department has secured multiyear appropriations through the Infrastructure Investment and Jobs Act and the Inflation Reduction Act. However, the DOE’s ability to announce award recipients under both of those acts is uncertain. You can access the department’s shutdown plan here. The Federal Energy Regulatory Commission would be able to continue certain critical functions related to safeguarding life and property. These functions include inspecting hydroelectric and liquefied natural gas projects and monitoring the reliability of the electrical grid. However, during a shutdown, FERC would cease accepting filings from the public and postpone all pending deadlines.
Environmental Protection Agency
A shutdown would affect several of the agency’s divisions and, notably, its ability to conduct notice and comment procedures, potentially delaying rulemaking timelines. The EPA is finalizing proposed rules on emissions from new and existing coal-fired electric generating units, and is establishing a national drinking water standard for per- and polyfluoroalkyl substances, or PFAS. A shutdown could lead to delays in these pending regulatory efforts, which themselves have significant state implications. Additionally, the White House has indicated that most EPA-led inspections at hazardous waste sites, drinking water treatment plants and chemical facilities would stop. The EPA would be unable to provide oversight and review of permits and plans to ensure the safety of communities’ air and water. Cleanup at Superfund sites could slow or stop. The agency would continue work on specific provisions of the Inflation Reduction Act, because it received multiyear appropriations from Congress and isn’t subject to the same spending limits as other government programs. The EPA’s contingency plan, last updated in September 2021, does not reflect those multiyear appropriations.
Department of Health and Human Services
HHS has reported that it would furlough 42% of its staff, or more than 37,000 workers, in a shutdown, though many programs would continue to operate because they are exempt from shutdowns or funding already has been provided through part of the fiscal year.
Programs exempt or funded for most of the year:
- Child Care Entitlement to States
- Vaccines for Children
- The FDA’s core emergency response functions
- Substance use prevention
- Programs funded through MIECHV
- Child Care Development Fund
Programs with funding for part of fiscal year 2024:
- Medicaid (funded through Dec. 31, 2023)
- Foster Care (funded through Dec. 31, 2023)
- Adoption Assistance (funded through Dec. 31, 2023)
- Child Support Enforcement (funded through Dec. 31, 2023)
- TANF block grant (funding provided by the September CR for first quarter)
- SNAP (payments may be made the month following a shutdown)
- WIC (funding provided through Dec. 31, 2023)
- Mental Health Block Grant (states can tap into BSCA funds)
- Preschool Development Grants (operate on a different fiscal year schedule)
Programs with potentially limited funds in a shutdown:
- Aging Grants to States
- Child Welfare Services (Title IV-B); states may use their own funds, if available
- Community Health Centers, mandatory portion
- Senior Famers Market Nutrition Program
- TANF Contingency Fund
Department of Homeland Security
The department estimates that 72% of its workforce would go without pay in a government shutdown. This includes Customs and Border Protection officers and disaster response officials. Specific state funding impacted includes:
- A portion of DHS funding to cities in border states that helps cover the costs of sheltering migrants. Funding drawdowns might not be possible, and no new awards could be made during a shutdown.
- The Cybersecurity and Infrastructure Security Agency would suspend physical and cybersecurity assessments for state government and industry, including election officials.
- Federal training programs for state, local and tribal law enforcement agencies would be suspended.
Department of Housing and Urban Development
HUD would continue a limited number of activities and programs during a government shutdown. For example, funding for HUD homeless assistance grants (for veterans and people with AIDS) would continue; however, most of the department’s fair housing activities would come to a halt.
Department of the Interior
Public lands, in most cases, would remain accessible, but without some services. Wildfire fighting efforts would continue.
Internal Revenue Service
Because of recent funds provided through the Inflation Reduction Act, IRS operations would continue as normal, unlike in previous shutdowns.
Department of Justice
A government shutdown would not affect most DOJ employees as most of the agency’s activities directly involve the safety of human life or the protection of property. These positions are exceptions to furlough and are designated “emergency” positions. Some civil litigation would be halted or postponed, however, if doing so would not affect the safety of human life or protection of property. Grants awarded by the Office of Justice Programs, such as Byrne/JAG and Community Oriented Policing, are funded from no-year appropriations; therefore, if there are carryover funds, the grants would not be impacted by a lapse in appropriations.
Department of Labor
During a government shutdown, the Bureau of Labor Statistics would halt the release of key economic data, including information used by the Federal Reserve to make decisions on raising or lowering interest rates. Competitive grant programs for states could experience processing delays. The processing of grant applications in the Office of Apprenticeship could be impacted due to a lack of funding and/or staff availability.
Department of Transportation
A shutdown’s impact on DOT agencies varies considerably because most federal highway, transit and highway safety programs receive mandatory spending from the Highway Trust Fund, not discretionary funds, making them generally resilient to shutdown effects. However, certain agencies would experience limitations. The Federal Rail Administration would continue rail accident investigations and maintain an inspector presence, but it would be unable to advance rulemaking efforts, including those related to railroad safety. Similarly, the Pipeline and Hazardous Materials Safety Administration could investigate hazardous materials accidents, facilities and shippers but could not conduct program development or rulemaking. The Federal Aviation Administration would face a unique challenge in a shutdown, not only because of a lapse in funding, but also it programs must be reauthorized by Dec. 31, 2023. If funding lapses and programs are not reauthorized, over 17,000 FAA employees would be furloughed, and projects funded by the Airport Improvement Program would cease. The program funds most safety infrastructure projects, including airfield and access roadways, at airport complexes.
For more on the potential effects of a federal shutdown, see these resources:
This story was compiled by NCSL’s State-Federal Relations Division.