The recently enacted legislation, the One Big Beautiful Bill Act (H.R. 1), and President Trump's Fiscal Year (FY) 2026 budget request signal significant changes to the federal, state and local government partnership.
This report outlines how the federal cost shift and spending cuts pose a significant challenge to counties nationwide. It aims to clarify the scope of the potential impact, highlight key areas of concern and provide county leaders with the information needed to prepare for and respond to these intergovernmental changes.
The annual appropriations process begins each year with the president submitting a budget request to Congress, outlining the administration's priorities for the upcoming fiscal year. The U.S. House and Senate Appropriations Committees then each hold a series of budget hearings with the heads of the various federal agencies and adopt a budget resolution outlining the topline spending limits for the respective fiscal year. Fiscal Year (FY) 2027 discretionary spending limits are not bound to statutory spending caps enforced by sequestration.
Counties rely on federal funds determined through the annual appropriations process to provide vital services to our residents. As such, we urge Congress and the president to commit to working together to reach an agreement on all spending legislation by Oct. 1 of each year.
The House Committee on Appropriations formally kicked off the FY 2027 appropriations process with subcommittees beginning to meet in mid-April. The U.S. Senate is set to start its process mid to late May.
On May 29, 2026, the Office of Management and Budget (OMB), in coordination with every federal grantmaking agency, published a proposed rule in the Federal Register rewriting 2 CFR Part 200 — the Uniform Guidance. This is the largest revision to federal grant rules since the Uniform Guidance was first published in 2013.
The Uniform Guidance governs every federal grant, cooperative agreement and pass-through award that counties receive. The proposed rule introduces new national policy requirements, modifies grant termination authority, integrates grants administration with the Treasury Do Not Pay system, reclassifies 2 CFR Subtitle A from guidance to binding regulation, and revises cost principles, audit requirements and pass-through entity responsibilities.
On Sept 1, Congress passed a Fiscal Year (FY) 2027 Continuing Resolution (CR) (H.R. 6500), which includes language postponing the implementation of OMB's proposed rewrite of the Uniform Guidance (2 CFR Part 200) until Dec. 11.