Last week, the Trump administration released its FY27 budget proposal, which would cut non-defense discretionary spending by 10%, or $73 billion. It includes significant changes at agencies that impact cities, including the Environmental Protection Agency, Department of Housing and Urban Development, and Department of Transportation. The administration’s proposal is the beginning of the budget process as Congress will now weigh in.
Administration Budget Recommendations
Department of Homeland Security: $63 billion request, a $2.2 billion or 3.3% decrease.
- Eliminate FEMA Non-Disaster Grant Programs (–$1.3 billion).
Department of Housing and Urban Development: $73.5 billion request, a $10.7 billion or 13% decrease.
- Eliminate Community Development Block Grants (–$3.3 billion). This is the sixth time President Trump has attempted to end the CDBG program. Congress has rejected the request each time.
- Eliminate HOME Investment Partnerships Program (–$1.3 billion).
- Eliminate Homeless Assistance Programs (–$393 million).
Department of Transportation: $26.6 billion request, a $1.6 billion or 6.2% increase.
- Increase funding for the One Big Beautiful Bill’s infrastructure program (+$1.3 billion).
- Provide $770 million for Nationally Significant Multimodal Freight & Highway Projects discretionary grants.
- Provide $714 million to repair or replace deteriorating highway bridges.
Environmental Protection Agency: $4.2 billion request, a $4.6 billion or 52% decrease.
- Cut State Revolving Funds by approximately $2.5 billion, nearly eliminating the program.
- Reduce Categorical Grants by approximately $1 billion. This would shift compliance and program costs to state and local governments.
- Provide $122 million to EPA for drinking water disaster response.
Department of Treasury: $11.5 billion request, a $1.5 billion or 12% decrease.
- Eliminate Community Development Financial Institutions Fund (–$204.5 million)
What Happens Next
The FY27 proposal is in line with similar spending cuts from the President’s FY26 budget which Congress mostly rejected or modified. But the proposal is still an important guidepost for cities to understand where administration and congressional priorities lie.
Within the six weeks following submission of the President’s budget, the various congressional committees are expected to report their spending and revenue proposals to the House and Senate budget committees. After each budget committee compiles this information, Congress is supposed to pass a concurrent budget resolution.
All 12 appropriations bills need to be passed by September 30. However, failure to pass a budget resolution has become more common in recent years. Congress has increasingly relied on short-term Continuing Resolutions to fund the government while appropriators work to draft and pass funding bills.