Overview
Reconciliation Update. Congress returned from recess this week to find itself in a familiar place, with the remaining portions of FY26 funding still mired in controversy and the FY27 appropriations cycle showing uneven progress between the two chambers. The Trump Administration's proposed anti-weaponization fund—first announced by Acting Attorney General Todd Blanche before the recess—continues to dominate discussions, stalling some funding negotiations and deepening partisan divisions.
As these dynamics continue to play out, the Senate completed work on the reconciliation package to fund ICE and CBP. As expected, Senate Democrats made the weaponization fund and related tax audit immunity for President Trump central points of contention during last night's vote-a-rama. Meanwhile, the House Rules Committee approved a rule for the reconciliation bill that waives the requirement for a two-thirds majority to consider it on the same day; however, the House adjourned Thursday evening and will not return until Monday.
While arm twisting surely may be needed when it comes time to vote, we still expect the House to pass the package sometime next week, thus closing the book on the FY26 funding fight.
FY27 Status Update. The FY27 appropriations process continues to move forward in the House. Nine of twelve bills have cleared the committee stage after full committee markups of Interior and T-HUD this week, and the Ag-FDA bill joined MilCon-VA in advancing through the full chamber with its passage on the floor yesterday. However, while MilCon-VA sailed through the House last month on a vote of 400-15, Ag-FDA passed with only a three-vote margin, a sign of the slim margins House leadership is contending with as relatively more contentious bills make their way to the floor.
Only the Homeland Security, Labor-HHS, and Defense measures remain for the House Appropriations Committee to mark up. Text for the Homeland Security and Labor-HHS bills were released yesterday. However, Appropriations Committee Chairman Tom Cole (R-OK) said yesterday he was waiting for the outcome of the House Armed Services Committee’s markup of the National Defense Authorization Act (NDAA) before finalizing the Defense bill, as he wanted to align funding levels with the authorization committee's priorities. With the NDAA bill marked up and reported out of the House Armed Services Committee yesterday, expect appropriations text to be released imminently, ahead of next Thursday’s subcommittee markup.
Across the Capitol, the Senate encountered new obstacles. Three full committee markups—Ag-FDA, Legislative Branch, and Commerce-Justice-Science—were scheduled for consideration this week but later pulled from the calendar. Senate Appropriations Chair Susan Collins (R-ME) indicated that the decision to postpone reflected a focus on getting through the vote-a-rama and passing the reconciliation bill. Chair Collins is planning to reschedule the markup for these bills to Thursday, and could even mark up MilCon-VA, Interior, and FSGG appropriations (if the Congressional Budget Office has enough time to review the budgetary impacts of these bills before then), an ambitious undertaking for the committee. However, some Democrats have signaled they will withhold support for moving bills forward absent a bipartisan topline deal, citing both the uncertainty surrounding the weaponization fund and broader disputes over the balance between defense and nondefense spending.
Outlook: As appropriators work to regain momentum, deepening partisan divisions continue to permeate the appropriations process—traditionally one of the few remaining areas of bipartisan cooperation on Capitol Hill. The risk of delayed or piecemeal funding measures later this year is growing as political challenges mount. Despite these headwinds, appropriators in both chambers remain eager to show progress before the August recess, hoping to demonstrate to their constituents that the process can still function effectively.
