The fiscal year ends on September 30, 2025, and policymakers have until midnight on that date to pass either appropriations bills to fund the 12 federal agencies for fiscal year 2026 or a continuing resolution to continue funding at fiscal year 2025 levels.
The government shutdown that loomed in March 2025 was resolved with a continuing resolution that continued appropriations until the end of FY2025, which we’ll reach next week. Now, Congress is facing a similar situation to push the deadline back for when they need to pass a full federal budget.
What happens during a shutdown?
During a government shutdown, federal agencies must discontinue all non-essential discretionary functions. Essential services continue, especially those relating to public safety—such as active-duty military, border patrol, and air traffic control—while non-essential personnel are placed on temporary unpaid leave.
Employees who continue working during a shutdown often go unpaid. These employees will receive back pay when appropriations are enacted. However, many families live paycheck to paycheck, and going a period without pay may cause financial hardship.
Current State of the Continuing Resolution
The U.S. House passed a continuing resolution (CR) that continued FY2025 funding levels as well as provided additional funding for security for Members of Congress, Supreme Court Justices, and executive branch officials. The CR would only provide funding until November 21, 2025. At that point, Congress would need to pass another CR or an annual federal budget.
This CR failed in the Senate on September 19, and, with the members of Congress on recess until Monday for Rosh Hashanah, a vote is on the calendar for Monday, September 29. This leaves very little time, as Congress must agree on the CR by midnight on Tuesday, September 30, to avoid a shutdown.
When a government shutdown is looming, agencies begin to develop their own shutdown plans to identify which activities may not continue until appropriations are restored. This includes furloughing employees and possibly laying off employees.
Since 1976, there have been 20 potential shutdowns, or gaps in funding. For these shutdowns, layoffs have not been standard. However, the Office of Management and Budget has instructed agencies to identify programs and activities where funding will lapse on October 1 and begin Reduction in Force (RIF) plans, including permanently eliminating jobs. This guidance specifically calls agencies to consider RIF plans for all projects that do not align with presidential priorities.
This call for Reductions in Force may urge the Democrats to vote quickly in order to prevent any lapse in funding, especially with the continuing resolution being clean and free from any extra legislation that has led to government shutdowns in the past.
Bottom Line
Congress will need to come to an agreement before midnight on September 30. The pattern of continually passing temporary appropriations will eventually need to stop, and members of Congress must figure out how to pass a regular budget and give peace to the government employees who find themselves in limbo during the annual or biannual shutdowns.