Federal Government Shutdown: What It Means for Cities

October 1, 2025

Federal funding expired Tuesday, Sept. 30 after Congress was unable to reach a continuation of funding agreement, creating potential impacts for cities if the shutdown isn’t resolved quickly.

With no agreement reached between House and Senate leadership to continue federal funding past Tuesday, Sept. 30 — the end of the federal fiscal year 2025 — the federal government is officially shut down as of Oct. 1. Unable to come to an eleventh-hour deal, the government closed just after midnight, marking the first government shutdown since the partial closure during the winter of 2018-2019, which lasted 35 days.

When the federal government experiences a full shutdown, funding for nonessential agencies and programs is halted. Federal workers deemed nonessential are placed on furlough, and nonessential programs are paused. Of the more than 2 million federal employees, nearly half fall into this category. The 20,000-plus federal workers in Minnesota will be immediately impacted. Typically, shutdowns are resolved within a few days, though some have stretched to two or three weeks.

Impact on the state and Minnesota cities

The effects of a federal government shutdown on states and cities depend on how long it lasts, and how much a state or city relies on federal money and services. During a shutdown, federal funding may be delayed or reduced. Federal approvals and permitting may also be delayed making it harder for states and cities to provide essential services, and slow or stall federally funded projects.

Here’s what we know and what we are continuing to monitor as the shutdown continues:

Transportation

The U.S. Department of Transportation (USDOT) website reports: “Portions of the Department of Transportation are currently in shutdown/furlough status due to a lapse in appropriations. Please continue to monitor this page for updates on DOT’s operating status.” The League will monitor updates and make them available to members.

Health care

The Minnesota Department of Human Services, which administers Medicaid in Minnesota, will continue operating during the shutdown as it is an essential service. The federal Supplemental Nutrition Assistance Program (SNAP) has contingency funds for about 30 days, while the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) has a shorter reserve funding period.

Housing and economic development

U.S. Department of Agriculture programs related to rural development and farm services may be disrupted as nonessential personnel are furloughed. While a short-term shutdown may not significantly affect the Department of Housing and Urban Development (HUD), a prolonged closure could impact affordable housing developers who have HUD loans or are awaiting federal approvals.

Emergency management

Most Federal Emergency Management Agency (FEMA) staff are considered essential employees and will continue to respond to emergencies and disasters. However, depletion of the Disaster Relief Fund and FEMA implementation of immediate-needs funding could delay reimbursements to states and local governments. Additionally, the National Flood Insurance Program, administered by FEMA, may lapse if a prolonged shutdown occurs.

Pollution control and public facilities

The Minnesota Pollution Control Agency, Minnesota Public Facilities Authority, and the Minnesota Department of Health — all of which administer various federally funded programs — expect continued operations without disruption.

What’s next?

The League will continue to monitor the impacts of the federal government shutdown and provide updates to member cities while engaging with our federal partners. If your city is affected by the federal government shutdown, consider reaching out directly your member of Congress.

Additional information

View comments and updates from our federal partners:

View federal agency contingency plans that may be relevant to cities: