As the federal government shutdown is now the longest in American history, the impact of the loss of federal funding has expanded beyond the Washington, D.C. Metro region and into cities, towns and villages across the country. The shutdown will have immediate and long-term impacts on our nation. The Congressional Budget Office (CBO) estimates that the GDP has been reduced by $18 billion in the fourth quarter of 2025 alone (PDF).
As local leaders look to support their residents, businesses and community services, they should be aware of the impacts to key federal programs that will affect their communities.
Supplemental Nutrition Assistance Program (SNAP)
Total federal funding for SNAP, formerly known as food stamps, amounts to about $100 billion a year, or about $4 billion a month going directly into local economies. These funds are disbursed from the federal government to states a month prior to their allotment to recipients. As such, October allotments were disbursed to states in September, before the federal shutdown.
Over the last few weeks, there has been concern that the U.S. Department of Agriculture (USDA) would not leverage contingency funds to disburse November payments, and NLC and NACo sent a joint letter to USDA asking them to do so. After 25 states sued the Administration (PDF) in federal district court over the November benefit, the court ruled on Nov. 6 that the Administration must fully-fund SNAP benefits by Friday, Nov. 7. In order to do so, the Administration will need to leverage funds other than the contingency fund.
Federal Employees
More than 2 million Americans are federal civilian employees, who reside in every congressional district across the country (PDF), and have not received paychecks since Oct. 1. The salaries of nearly 3 million military personnel remain at risk for November as the shutdown continues despite reallocation of $5.3 billion within the Department of Defense budget for October military salaries. Congressional representatives continue to receive approximately $15,000 a month in salary during this shutdown.
Head Start
Head Start programs with nearly 700,000 children, 500,000 parents and 250,000 staff across 44 states continue to be affected. Federal funding for Head Start is disbursed on a staggered grant cycle, meaning programs receive their funding at different times throughout the year. As of Nov. 5, Head Start sites in 18 states and Puerto Rico have had to close their doors, leaving nearly 10,000 children and families without access to their care. In order to continue operating, Head Start programs will be faced with decisions such as furloughing staff, relying on reserve accounts, emergency loans and delayed payments to vendors. These Head Start staff will not receive paychecks and the children will not have a place to go during work hours, creating challenges for their parents who use Head Start care to attend their own jobs.
Low Income Home Energy Assistance Program (LIHEAP)
Nearly 6 million American households depend on the LIHEAP to pay their winter heating and summer cooling bills. The U.S. Department of Health and Human Services (HHS) distributes $4.1 billion to states for this program, 80 percent of which goes out in the winter. States typically receive their allocations in late October/early November. While HHS has stated that it will swiftly work to get funds out to states when the shutdown is over, recipients can face life-threatening cold weather now. Rep. Fitzpatrick (R-PA-1) has called on HHS to use every available authority to maintain LIHEAP operations.
Small Businesses
The shutdown prevents over 300 small businesses a day from receiving federally backed funding at a cost of $170 million. Since the lapse in appropriations began, that figure amounts to approximately 4,800 small businesses nationwide unable to secure $2.5 billion in loans. Small businesses are losing an average of $371 million a month during the shutdown.
Medicare and Medicaid
Over 60 million Americans rely on Medicare. The average hospital relies on Medicare and Medicaid for 25 percent of its revenue but operates at only a 15 percent surplus. While the impacts of Medicare delays may not impact hospitals immediately, if it continues into December, then hospitals will be operating at a loss. Community hospitals operate at an almost zero-dollar surplus and will be quickly affected.
Take Action!
Join NLC in telling your congressional leaders that shutdowns harm local governments and communities by:
- Disrupting local budgets reliant on federal grants, risking delays and fund recapture.
- Cutting off critical programs for vulnerable residents.
- Delaying pay for federal workers, impacting families, small businesses and local economies.
- Undermining trust in federal institutions and intergovernmental partnerships.
About the Authors
NLC Leads State and Local Government Organizations in Urging Congress to End Shutdown
How Cities are Rethinking Fines and Fees to Strengthen Residents’ Economic Stability
NLC and NACo Ask USDA to Fund SNAP Benefits
From the Event Member Update Call: Federal Government Shutdown Impact on Local Governments
CitiesSpeak Podcast Bonus Episode: Navigating the Federal Government Shutdown
