Analysis of FY 2026 President’s Budget
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Executive Summary
As key intergovernmental partners and service providers for local communities, America’s counties rely on federal partnership to best support our residents. Counties own and operate infrastructure, transportation, public safety and emergency services and provide public health and well-being services. With our many responsibilities, counties use federal funds to implement important services on the ground.
This analysis will provide a comprehensive overview of proposed increases, cuts or eliminations to key federal programs in the president’s budget appendix for Fiscal Year (FY) 2026 that are relevant to county governments and a summary of the budget outlining items of note for county governments.
Overview: The President’s FY 2026 Budget Request
On May 30, the White House released a budget appendix document containing detailed information on the President’s FY 2026 discretionary budget request to the U.S. Congress, outlining the administration’s proposal for spending for the fiscal year beginning October 1, 2025. This expanded request follows the release of the “skinny budget” on May 2 that only included budget proposals for certain annual spending priorities of the Administration.
Of note, none of the budget documents thus far include details about proposed changes to mandatory spending programs, such as Medicaid and the Supplemental Nutrition Assistance Program (SNAP), as changes to these programs are currently being considered in Congress through the budget reconciliation process. We anticipate the full budget to be released following passage of this bill.
The discretionary budget requests reducing annual non-defense spending by 22.6 percent, or about $163 billion, and proposes increasing defense spending by 13 percent or about $119.3 billion. Additionally, the budget appendix includes bill language for all 12 annual spending bills for Congress to consider but is unlikely to be enacted in its current form.
Next Steps: The Appropriations Process
The U.S. House Appropriations Committee has released their tentative schedule for action on the committee’s FY 2026 spending bills that will begin on June 5 and continue through the month of July. It’s unclear when the U.S. Senate Appropriations Committee will begin work on their proposals. NACo will keep counties apprised of key program funding details as the FY 2026 appropriations process unfolds.
Major Proposals of Significance to Counties
- Reduces funding by $1.18 billion for the Farm Service Agency and Natural Resources Conservation Service, which provide farm loans, conservation programs, and disaster assistance for agricultural producers
- Decreases U.S. Forest Service funding from $16.8 billion to $4 billion, affecting programs related to wildfire mitigation, forest health, recreation access, and watershed protection
- Reduces USDA Rural Development funding by $3.14 billion, with proposed eliminations of programs that support rural housing, broadband, water systems, and community facilities
- Eliminates the Rural Disaster Assistance Fund, which helps rural counties recover from natural disasters and restore essential infrastructure and services
- Eliminates $3.6 billion in funding for six regional commissions, scaling back targeted federal investments in economically distressed rural regions outside the Appalachian Regional Commission
- Increases the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) by $100 million
- Eliminates the Economic Development Administration, which helps counties invest in infrastructure, workforce development and small business support to help bolster local economic prosperity and resilience
- Significant Cuts to Vital Housing Programs such as the Community Development Block Grant (CDBG); HOME Investment Partnerships Program (HOME); and the Pathways to Removing Obstacles (PRO) Housing program.
- Ends $291 million in discretionary awards for the Community Development Financial Institutions (CDFI) Fund, limiting rural communities’ ability to expand access to capital, support small businesses and drive local economic growth
- Consolidates rental assistance programs into a state block grant and reduces their funding by $26.7 billion, as well as implements a 2-year cap on assistance for able bodied adults. A block grant is intended to decrease federal oversight and increase the state share of program funding
- Consolidates homeless assistance programs into an Emergency Solutions Grant (ESG) that provides short- and medium- term housing assistance capped at two years
- Reduces funds for self-sufficiency programs by $196 million but does include $25 million in housing grants for youth aging out of foster care
- Consolidates workforce development grants into the Make America Skilled Again (MASA) state block grant and reduces funding by $1.64 billion, as well as requires 10 percent of allocated funds to be spent on apprenticeship programs
- Increases funding for VA medical care by $3.3 billion with an emphasis on tailored services and improved access to community care, as well as augments the VA’s existing case management and support services for at-risk veterans
- Reduces the Clean and Drinking Water State Revolving Loan Funds and Water Infrastructure Finance and Innovation Act (WIFIA) program, which would impact counties’ ability to maintain and improve water infrastructure without raising rates for residents
- Rescinds Infrastructure Investments and Jobs Act (IIJA) funds for the Weatherization Assistance Program, which helps low-income households reduce energy costs and increase the energy efficiency of their homes
- Makes cuts to the U.S. Environmental Protection Agency’s (EPA) Brownfields program, which limits county’s ability to clean up and redevelop contaminated parcels of land to create new economic development opportunities for residents
- Reduces funding of the U.S. Army Corps of Engineers by 20 percent from FY 2025 which would the limit the assistance provided by the Army Corps to protect, maintain and develop water infrastructure systems while advancing county interests related to ports, inland waterways, levees, dams, wetlands, watersheds and coastal restoration
- Reduces the U.S. Election Assistance Commission (EAC) budget by 40 percent from $28 million to $17 million, resulting in reduction of staff and technical assistance available to counties for election administration
- Zeroes out election security grant funds to states that counties can access as a subrecipient to help improve election equipment and make other election security upgrades
- Excludes details on estimated federal revenues and economic growth as a result of enactment of the budget reconciliation bill
- Reduces the U.S. Department of Health and Human services budget by 25 percent from $127 billion in FY 2025 to $95 billion
- Implements major agency reorganization would consolidate its 28 operating divisions into 15, creating new entities like the Administration for a Healthy America (AHA), Administration for Children, Families, and Communities, and multiple new offices under the Secretary
- Eliminates key health agencies through the creation of the Administration for Healthy America (AHA) which would absorb the Health Resources and Services Administration (HRSA), the Substance Abuse and Mental Health Services Administration (SAMHSA), the Office of the Assistant Secretary for Health (OASH), and select programs from the Centers for Disease Control and Prevention (CDC)—into a single entity. AHA would oversee programs such as the 988 Suicide and Crisis Lifeline, rural opioid response, and maternal and child health services previously managed by these agencies
- Consolidates major behavioral health funding streams for counties by merging the Substance Use Prevention and Treatment Block Grant and the Community Mental Health Services Block Grant into a single $4.14 billion Behavioral Health Innovation block grant
- Reduces funding to the Centers for Disease Control and Prevention (CDC) by $3.9 billion—from $8 billion in FY 2025 to $4.1 billion in FY 2026—eliminating or scaling back several programs as part of a broader agency restructuring. The budget also proposes creating a new Center for Preparedness and Response to consolidate key public health preparedness efforts, while preserving partial funding for HIV initiatives, public health infrastructure, and workforce training
- Eliminates the Low-Income Home Energy Assistance Program (LIHEAP), which helps low-income households pay their heating and cooling bills, and eliminates the Community Services Block Grant (CSBG), which supports local agencies in designing and implementing anti-poverty programs
- Reduces the U.S. Department of Education’s budget by $12 billion but preserves Title l funding for low-income schools, and funding for special education under the Individuals with Disabilities Education Act (IDEA)
- Maintains level funding for child welfare services, the Social Services Block Grant (SSBG) and the Temporary Assistance for Needy Families (TANF) program
- Maintains level funding for the Child Care and Development Block Grant (CCDBG) and Head Start. CCDBG, administered by counties in 8 states, helps ensure low-income families have access to affordable, high-quality child-care. Through Head Start, low-income children and families can access comprehensive services to support school readiness and family wellbeing
- Cuts funding for the Special Supplemental Nutrition Program for Women, Infant, and Children (WIC). WIC is administered through nearly 2,000 local agencies and provides nutrition assistance and social services to 6.7 million pregnant and post-partum women, infants and young children who are low-income and deemed nutritionally at risk
- Eliminates the Federal Emergency Management Agency’s (FEMA) Shelter and Services Program and the U.S. Department of Justice’s State Criminal Alien Assistance Program
- Increases FEMA’s Disaster Relief Fund by $4 billion. Cuts to the FEMA’s non-disaster grant programs, representing an almost 20 percent decrease of the total FEMA grant portfolio
- Cuts FEMA’s training and education programs, totaling over $100 million for programs like the National Domestic Preparedness Consortium and Emergency Management Institute
- Maintains funding for critical U.S. Department of Justice (DOJ) programs, including the Byrne-Justice Assistance Grant, Community Oriented Policing (COPS) Hiring and Second Chance Act programs
- Consolidates the Office of Community Oriented Policing Services (COPS) Office, Office of Tribal Justice and Office of Violence Against Women under the Office of Justice Programs at DOJ
- Provides $175 million for a new U.S. Wildland Fire Service within the U.S. Department of the Interior (DOI) by consolidating wildfire responsibilities currently split between USDA and DOI agencies, which may improve coordination but could also impact how counties engage with federal partners and access resources for local fire management
- Maintains Payments In Lieu of Taxes (PILT) funding at $635 million for over 1,900 counties in 49 states
- Prohibits funds from the DOI to be used to write or issue a proposed rule for greater sage-grouse
- Cuts $491 million from the Cybersecurity and Infrastructure Security Agency, or about 17 percent of operational funds, which impacts technical services provided to state and local governments through programs like the Multi-State/ Elections Infrastructure Information Sharing and Analysis Center (MS/ EI- ISAC)
- Increases funding for critical infrastructure grant programs including $770 million for the Infrastructure for Rebuilding America (INFRA) grant program and $400 million for rail safety grants
- Provides $824 million for Federal Aviation Administration (FAA) upgrades at airports—including county-owned airports—across the country
- Boosts overall formula funding for highways and transit programs above FY25 levels, thanks in part to advance appropriations from the Bipartisan Infrastructure Law (BIL)
- Cuts the Essential Air Service (EAS) program by restricting program eligibility, which would likely mean some counties that currently have federally subsidized commercial air service would lose that access
Federal Budget Process
The President Submits Budget Proposal to Congress
Under current law, the president must submit the budget request between the first Monday in January and the first Monday in February.
House and Senate Budget Committees Develop and Report Budget Resolutions
If the respective chambers pass these resolutions, they reconcile them in a budget conference. This sets the total amount of money congressional Appropriations Committees may spend for the fiscal year. If the two chambers are not able to agree on a budget resolution, each chamber may enact a “deeming resolution,” which sets appropriations levels for that chamber’s Appropriations Committee.
House and Senate Appropriations Committees Allocate Funding to Federal Programs
The Committees set specific discretionary funding levels for federal programs among 12 subcommittees, each dealing with a different part of the budget. After the respective chambers pass individual appropriations bills, they must go to conference to reconcile the appropriations bills for a final vote.
The President Signs Funding Bills into Law
All 12 funding bills must be enacted in time for the beginning of the new fiscal year on October 1st. In recent years, the government has struggled to meet this deadline and instead passed temporary extensions of current spending levels, known as continuing resolutions, well into the new fiscal year.