Capital hill government spending concept

On Friday, March 14, Congress approved a continuing resolution (CR) to fund the federal government for the remainder of fiscal year 2025, through September 30, 2025. The CR funds the government at FY 2024 levels, with a few exceptions. The continuing resolution increases defense spending by $6 billion and immigration enforcement by $440 million, while cutting funding for the Internal Revenue Service by $20 billion. 

The CR included several provisions that significantly impact local governments, including: 

  • All FY 2025 Congressionally Directed Spending ("earmarks") which had been approved by the House and Senate Appropriations Committees last summer as part of their FY 2025 budget proposals are eliminated. This action removed funding for member-requested projects, including Community Project Funding, which often supports local infrastructure, educational programs, and community development initiatives. Consequently, many local governments may experience a reduction in federal support for specific projects tailored to their communities' unique needs.
  • Housing Assistance: The CR reduces rent subsidies for low-income and working Americans by more than $700 million.
  • Homeless Services: Funding for homeless services across 400 communities nationwide is reduced by $168 million.
  • Telehealth Services: The CR reauthorizes several healthcare programs, including those that allow greater flexibility for telehealth services.
  • Medicaid Disproportionate Share Hospital (DSH) Program: The CR extends the DSH program, ensuring that hospitals serving a large number of Medicaid or uninsured individuals continue to receive additional payments. 

With the passage of the continuing resolution for FY 2025, Congress will now shift its focus to developing the FY 2026 budget. Lawmakers are expected to engage in negotiations over funding priorities, long-term fiscal policy, and potential adjustments to discretionary and mandatory spending. As part of these discussions, tax reform is likely to emerge as a key issue, with debates over revenue generation, corporate and individual tax rates, and potential changes to tax incentives and deductions. The outcome of these deliberations will have significant implications for federal programs, local government funding, and overall economic policy. 

ICMA, along with its advocacy partners in the Big 7 and Public Finance Network, will be closely monitoring these developments to advocate on behalf of local government priorities as the final budget and tax framework take shape.

 

 

EVENTS

Jan 31 | FREE WEBINAR | Impacts of Immigration Executive Orders on Local Governments  

 

RESOURCES

ICMA's Corporate Partner, The Ferguson Group, has been closely monitoring and providing updates on executive actions taken by the Trump administration. To ensure local governments have the most relevant and timely information, they have developed a series of Special Reports:

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Public Policy