New Congress Faces Continued Partial Shutdown

Thursday, January 3, 2019

When the 116th Congress convenes today, federal lawmakers will begin the new session facing a partial government shutdown that began nearly two weeks ago. How long the shutdown will last remains uncertain as there seems to be no resolution of the primary disagreement over border wall funding. Seven of the twelve Fiscal Year (FY) 2019 appropriations bills still need to be approved. The bulk of the impact will first be seen in the national capital region as many federal workers will not be allowed to report to work until funding is approved.

The impact on state and local governments should be minimal as long as the shutdown ends soon, but the impact could also depend on the particular federal programs important to your respective jurisdictions. Finance officers may need to be prepared for a prolonged shutdown if your jurisdiction receives grant funding (e.g., a U.S. Department of Housing and Urban Development’s Community Block Grant). Please be aware that reimbursements and technical assistance will be unavailable from agencies that remain unfunded.

Also included in the partial shutdown are the US Treasury and the Internal Revenue Service. The IRS, a key body under the Treasury Department, has indicated that it plans to furlough a significant fraction of its workers under a contingency plan, since tax season has yet to get underway. This partial shutdown could result in delays to this year’s filing season, which was already expected to be complicated since it’s the first to include the implementation of 2017 tax reforms. Treasury Securities – State and Local Government Series window remains open; however, it is unclear how long it will remain open – GFOA recommends your finance team convene soon to consider potential impacts to your jurisdiction.

The impact is also uncertain for regulatory matters like the pending amendments to SEC Rule 15c2-12. Click here for each federal agency’s shutdown contingency plans compiled by the White House Office of Management Budget, or click here for the White House’s FAQs on a lapse in appropriations. GFOA’s Federal Liaison Center will continue to monitor and report developments as they occur.