Overview
As Congress adjourns for the next two weeks, the Steptoe Appropriations Team will also take a brief pause. We wish you and your families a wonderful holiday season and a Happy New Year, and we look forward to returning to your inbox with the latest updates in 2026.
Heading Into the Holidays with FY26 Work Still Ahead. Congress left Washington yesterday for the holiday recess. When lawmakers return in January, they will resume work on the remaining nine of twelve fiscal year (FY) 2026 appropriations bills, having already enacted Agriculture, Military Construction-VA, and Legislative Branch in November. Movement is happening, but the calendar is tight, leaving limited time to finalize the rest before January 30th. Subcommittee allocations for many of the remaining bills are still not fully agreed upon between House and Senate appropriations leaders, but they are very close. Having the allocations will allow members to fully negotiate the bills.
In the Senate, appropriators fell short of finishing their five‑bill "minibus" strategy, which would combine Labor‑HHS, T‑HUD, Defense, Commerce‑Justice‑Science, and Interior. Senators worked for weeks to clear the measure for floor consideration, but in the end, time ran out. It remains uncertain whether the Senate will revisit the minibus in early January or turn directly to taking up conferenced bills.
House and Senate Appropriations Chairs Tom Cole (R‑OK) and Susan Collins (R‑ME) have discussed advancing a series of three-bill packages, which would be fully conferenced between the chambers. Early discussions suggest that CJS, Energy and Water, and Interior could form the first package in early January. The last package would likely be the commonly paired Labor‑HHS‑Education and Defense bills, along with T-HUD, due in part to the high number of member earmarks.
Shutting Down Shutdown Talk. Notably, there appears to be little appetite for a shutdown in January. Senate Minority Leader Chuck Schumer (D-NY) said this week that Democrats do not want a shutdown, and President Trump has quietly expressed similar sentiments. These statements suggest the likelihood of an end-of-January shutdown is lower than some had projected in recent weeks. Still, pressure remains high to complete as much of the appropriations process as possible before the Jan. 30thdeadline. Failure to do so could force Congress to adopt a year‑long continuing resolution (CR) for the remaining bills, which would lock in current funding levels. As we have noted before, a year-long CR would create significant challenges for new starts, program expansions, and other priority initiatives.
Outlook: Appropriations as a Key Policy Vehicle. While this year's appropriations process has been anything but predictable, annual spending bills remain one of the few "must‑pass" measures in Congress. They present a critical opportunity to advance and safeguard priorities. Beyond funding, appropriations serve as a powerful vehicle for enacting policy, directing agency action, and shaping legislative outcomes.
As appropriators work to close out FY26 in January, the FY27 cycle will launch almost immediately. Posture hearings will begin within weeks, the president’s budget is already taking shape, and Hill deadlines will arrive quickly. The window to act will be short, so early engagement is essential. Our appropriations team is actively advising clients on how to engage early, position priorities, and navigate key decision points as FY26 concludes and the fast‑moving FY27 process begins.
