Partial Government Shutdown Ends

Action: Today, Congress passed an appropriations package funding the agencies of Defense, Labor, Health and Human Services, Housing and Urban Development, Transportation, Education, State, and Treasury through the end of fiscal year (FY) 2026 (September 30). The package also funds the Department of Homeland Security (DHS) only through February 13 to allow for further negotiations on restrictions to DHS immigration operations.

Trusted Insights for What’s Ahead^®

• Last week, the House approved the remaining six FY2026 appropriations bills and combined them into one package for Senate consideration ahead of a January 30 deadline to pass the bills. Senate Democrats came out in opposition to funding DHS without additional restrictions on DHS immigration agents following the fatal shootings of two American citizens in Minneapolis.
• To break the impasse, Senators negotiated with the White House to break out the DHS appropriations bill from the others.¹ While the agencies under the other five appropriations bills would be funded for the entirety of FY2026, the deal includes a two-week continuing resolution (CR) for DHS until February 13 for Congress to agree on restrictions to DHS operations.
• On Friday, the Senate passed the revised appropriations package² 71-29 after rejecting several amendments.³ However, this did not avert a temporary partial government shutdown over the weekend because the House did not reconvene until February 2.
• Over the weekend, House Democrats signaled that they would not provide sufficient votes to pass the compromise spending package under a suspension of House rules (2/3 majority vote), requiring the House Rules Committee to support a rule to bring the legislation to the House floor under a simple majority vote.⁴ Despite demands from some House Republicans to attach voter ID legislation to the appropriations package,⁵ the Rules Committee reported the rule 8-4.⁶ The House then passed the rule by a narrow 217-215 vote⁷ and the appropriations package by a vote of 217-214 (with 21 Democrats voting in favor and 21 Republicans voting against).⁸
• With more than 95% of the Federal government now funded for FY2026, attention turns to DHS funding, where Democrats and Republicans remain at odds over specific reforms. Democrats led by Senate Minority Leader Chuck Schumer (D-NY) have demanded prohibitions on roving DHS patrols, stronger warrant requirements, the adoption of a universal code of conduct for Federal law enforcement officers, a ban on agents wearing masks, and body cameras for DHS agents.⁹ Some Republican Senators, including Senators Susan Collins (R-ME), Thom Tillis (R-NC), and Lisa Murkowski (R-AK), are amenable to some DHS reforms, while others such as Senator Ted Cruz (R-TX) supporting current DHS operations.¹⁰
• What this means for business: Today’s vote means almost all Federal agencies are funded for FY2026. The tight timeline for passing full-year funding for DHS and the contentious nature of those negotiations raise the risk of further CRs for DHS or the shutdown of that agency later this month, affecting not only immigration and border security but also agencies such as the Federal Emergency Management Agency (FEMA), the Transportation Security Administration (TSA), the Cybersecurity and Infrastructure Security Agency (CISA), and others.