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Real GDP by State
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This Week in DC
The Senate is in session and the House is out.
The Senate convenes today and will take a procedural vote on a motion to proceed to S. 3627. The chamber is expected to consider appropriations bills later in the week (see story below). Committee activity scheduled for the week includes: the Commerce, Science and Transportation Committee holds a hearing Wednesday on FirstNet’s role in public safety and the Health, Education, Labor and Pensions Committee will hold a hearing Wednesday on educational choice.
The Federal Reserve’s Open Market Committee holds a meeting this week and will announce any changes to interest rates on Wednesday.
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Treasury Publishes SLFRF Reporting Guide
Last week the Treasury Department published the State and Local Fiscal Recovery Funds (SLFRF) Project and Expenditure Report User Guide for the current reporting period, which ends January 31. According to the Change Summary on pg. 5, there is one notable change to the system for the fourth quarter 2025 reporting cycle related to a newly added bulk upload function for required speed tier and pricing for broadband location data.
Reconciliation Resources
Following enactment of H.R. 1, the One Big Beautiful Bill Act (OBBBA), a number of resources have been released examining the legislation's impact and providing implementation guidance. Newly released resources are included below.
- The Internal Revenue Service (IRS) issued frequently asked questions in this fact sheet related to the new deduction for qualified overtime compensation under OBBBA. For tax years 2025 through 2028, individuals who receive qualified overtime compensation may deduct the amount that exceeds their regular rate of pay and is reported on a Form W-2 or Form 1099. Information from the IRS on all OBBBA provisions can be found here.
Final Spending Bills Move to Senate as Possible Partial Government Shutdown Looms
The current continuing resolution (CR) funding a portion of the federal government expires January 30. To date, six spending bills have been signed into law: Agriculture, Military Construction-Veterans Affairs, Legislative Branch, Commerce-Justice-Science, Interior-Environment, and Energy-Water.
The remaining six bills have passed the House and were bundled together before going to the Senate: Defense, Labor-Health and Human Services-Education, Homeland Security, Transportation-Housing and Urban Development, Financial Services-General Government, and National Security-State.
The Senate is expected to take up the spending package later this week but there is growing scrutiny over the Homeland Security funding bill. If differences cannot be resolved, there is a possibility of a partial government shutdown affecting the agencies funded by the six remaining bills.
Administration Reviewing Federal Funds to 14 States, DC
According to media reports, the administration has ordered a review of federal funding sent to 14 states and the District of Columbia. A data request issued by the Office of Management and Budget (OMB) directs all federal departments and agencies to complete a review to provide a detailed spending report on all federal funds that are provided to components, agencies, or instrumentalities of certain states. The memo notes “this is a data-gathering exercise only. It does not involve withholding funds…” Agency responses are due January 28. Per this press clip, the covered states include California, Colorado, Connecticut, Delaware, Illinois, Massachusetts, Minnesota, New Jersey, New York, Oregon, Rhode Island, Vermont, Virginia, and Washington (plus the District of Columbia).
President Signs Executive Order Extending FEMA Review Council
On Friday the President signed an executive order entitled “Continuance of the Federal Emergency Management Agency (FEMA) Review Council”. The order continues the review council, which was created by executive order in January 2025, until March 25, 2026. The council was charged with advising the President on the existing ability of FEMA to capably and impartially address disasters occurring within the U.S. and shall advise the President on all recommended changes related to FEMA to best serve the national interest.
Administration Drops Appeal of Guidance on Eliminating Diversity Programs in Education Funding
According to media reports, last week the administration dropped its appeal of a federal court ruling that ruled against guidance related to diversity, equity, and inclusion in schools. In February 2025, the Department of Education sent a Dear Colleague Letter to educational institutions receiving federal funds noting certain actions that must cease; failure to comply could result in loss of federal funding. A judge ruled in August that the effort violated the First Amendment and federal procedural rules.
Federal Judge Rules Against Efforts to Suspend NEVI Funding
According to media reports, on Friday a federal judge ruled against the administration’s action to suspend funding awarded through the $5 billion National Electric Vehicle Infrastructure (NEVI) formula program. In February, the administration sent a letter revoking state plans and freezing funds for the program, which was authorized by the Infrastructure Investment and Jobs Act (IIJA). A group of 20 states and the District of Columbia sued over the action. Subsequently the Department of Transportation (DOT) reissued guidance on the program. The ruling last week barred DOT from revoking previously approved state deployment plans and from withholding funds for the plans.
ACF Launches New Public Dashboard on State Child Welfare Performance
On Monday the Administration for Children and Families (ACF) launched a new public dashboard showing state-by-state performance data on child safety and permanency outcomes through the first-ever Child and Family Services Review Data Profile Dashboard. The President’s executive order “Fostering the Future for American Children and Families” requires an annual public scorecard that measures state child welfare system performance. According to the announcement, the agency plans to iterate on the current dashboard to create more user-friendly interfaces with expanded comparison tools. The initial public dashboard presents seven statewide data indicators, two safety indicators and five permanency indicators.
Education Urges States to Maximize Schoolwide Program Flexibilities
Last Wednesday the Department of Education’s Office of Elementary and Secondary Education sent a letter to chief state school officers highlighting the existing flexibility states have to encourage Title I schools to consolidate their federal, state and local funds. According to the announcement, state educational agencies may approve any Title I school to implement a schoolwide program. A Title I schoolwide program may then reduce red-tape and compliance costs by consolidating federal, state and local funds into one flexible funding stream. The department previously sent guidance on direct student services, equitable services, school safety, and Title I school improvement provisions.
Labor, Education Issue Guidance on WIOA State Plans
On Monday the Departments of Labor (DOL) and Education (ED) released guidance to support states in updating their Workforce Innovation and Opportunity Act (WIOA) state plans as part of their continuing commitment to streamline the federal workforce and education systems. The guidance notes WIOA planning strategic priorities including industry-driven strategies, worker mobility, integrated systems, accountability, and flexibility and innovation. The original deadline for state plan modifications was March 3 but has been extended to April 30 to allow flexibility and promote greater alignment.
DOL Issues Guidance Delaying Compliance Date for Merit Staffing
Last week the Department of Labor (DOL) published a final rule delaying the compliance date states are required to meet when implementing the merit staffing requirements for Employment Services. The final rule extends by one year the compliance deadline that was set in the 2023 Wagner-Peyser Act Staffing final rule that required states to use state merit staff to deliver Employment Services, in contrast to the more flexible staffing options for other Workforce Innovation and Opportunity Act (WIOA) programs. The new deadline is January 21, 2027.
DOE Announces Cancellation and Revision of $83 Billion in Loans
Last week the Department of Energy (DOE) announced the Office of Energy Dominance Financing (EDF) is restructuring, revising, or eliminating more than $83 billion in loans and conditional commitments from the prior administration’s loan portfolio. This action follows a review by the EDF of each borrower to ensure loans were a responsible investment of taxpayer dollars and aligned with the administration’s priorities. According to department, EDF has completed or is in the process of de-obligating more than $29.9 billion and has completed or is in the process of revising another $53.6 billion. Additional information can be found here.
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