Negotiations over Fiscal Year 2026 Appropriations are underway as the September 30 deadline to avoid a government shutdown nears. The most likely path to ensure federal funding will be through another continuing resolution (CR), a legislative tool that allows Congress to bypass the normal legislative process of stand-alone appropriations bills.
With less than 3 weeks to reach an agreement, two factions have emerged. The Trump administration and fiscal conservatives want to keep static funding levels through January 31. Democratic and Republican appropriators want to extend current funding no further than November, providing more time to negotiate a deal on expiring health insurance subsidies and a funding plan that goes through September 2026. President Trump has yet to weigh in on the subsidies expiring December 31, while fiscal conservatives oppose extending the subsidies.
Democratic members are split over how to proceed with the tight timeline and negotiate how to avoid a government shutdown, debating whether now is the time to fight over health subsidies. As of now, Senate Majority Leader John Thune has insisted on a straightforward CR deal that does not include a subsidies extension and has floated the possibility of a separate deal later this year. A final deal will need President Trump’s full endorsement, but a concrete plan from GOP leaders has yet to emerge.
In May, the Trump administration released their FY26 budget requests proposing a wide range of cuts and increases. Notably for municipalities, the administration is proposing a nearly 90% cut to the Clean Water and Drinking Water State Revolving Funds – from $2.7 billion in FY25 to $305 million in FY26. If you’d like to share your opposition to these cuts now that the appropriations process is underway, the National League of Cities (NLC) is urging local leaders to act now and advocate for protecting essential water investments.