Federal Shutdown and Pennsylvania Budget Impasse Update

​The current federal government shutdown is now among the longest in US history. Negotiations have intensified, but for now, both the Administration and Congressional Republicans are emphasizing the need to pass a clean Continuing Resolution (CR) to reopen the government. However, Democratic leadership in the Senate remains firm that negotiations should address broader funding issues, namely an extension of COVID-19 pandemic-era Obamacare subsidies set to expire at the end of this year.

The White House has indicated a willingness to continue discussions on these and other topics while operating on at least a short-term Continuing Resolution to end the government shutdown. President Trump has also called upon Senate Republican Leadership to abolish the filibuster. While Republicans control 53 seats, a 60-vote threshold is needed to end a filibuster.

In the meantime, agencies across the Federal Government are feeling the effects as more employees miss paychecks and government-wide operations slow.  Federal Contractors are preparing for possible disruptions if the shutdown continues, and pressure is building from affected sectors to resume normal funding.  Air traffic controllers and other essential personnel continue to report to work without pay, raising concerns about long-term staffing and safety. Federal unions representing these workers, particularly the American Federation of Government Employees (AFGE), have called for an end to the shutdown but have directed their appeals primarily toward Congress rather than the Administration. Industry leaders warn that extended delays could begin to impact travel schedules and freight operations.

Despite a federal court ruling directing the Administration to fund the Supplemental Nutritional Assistance Program (SNAP) at least partially, President Trump stated he will not do so until a budget framework is agreed upon. Several states have announced plans to mitigate cuts to this program, including Pennsylvania, where Democrat Governor Josh Shapiro declared a disaster emergency to make $5 million in funding available for SNAP participants.

In addition to SNAP, federal funds comprised about a third of spending within state budgets for the 2024 fiscal year, according to the latest estimates from the National Association of State Budget Officers. Due to this, the federal shutdown will have an impact on some state programs, especially those that are federally funded but state-administered.

With Pennsylvania now the last state in the nation without a 2025-26 fiscal year budget, this impact could be amplified. Indeed, it has been 126 days past the June 30th Pennsylvania state budget deadline, but over the last two weeks, Governor Shapiro has significantly increased his engagement between the Democratic-controlled House, which has a one-vote majority, and the Republican-controlled Senate.

While negotiators are keeping details tight to the vest, a deal is apparently coalescing around funding education at a higher number in exchange for legislative language barring the Commonwealth from entering the Regional Greenhouse Gas Initiative (RGGI). For education, Democrats want to see the financing of low-income school districts following a court decision, as well as cyber charter reform. As for the energy debate, Republicans want Pennsylvania to opt out of RGGI and also ease permitting rules.

However, other factors are likely in play, and any budget deal requires bipartisan support, with neither party getting everything it wants.  Thus, it is unclear when legislative leaders will ask their respective members to return to Harrisburg to vote on a final package.

In the meantime, the impasse has held billions in state funds for essential services, leaving counties and schools to rely on reserves, emergency loans, or cuts.
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Results from the elections on November 4th could be a factor in the negotiations happening in both Washington, D.C., and Harrisburg. Democrats did well nationally, winning the Gubernatorial races in both Virginia and New Jersey. Along with those two states, Pennsylvania election results were watched by national pundits because three Pennsylvania Supreme Court Justices were up for retention. All three won, keeping the court under Democrat control. ​