Federal Update: DHS Shutdown Looms After Senate Vote Fails

With most federal agencies now funded through the end of fiscal year 2026, attention has shifted squarely to the Department of Homeland Security, where a failed Senate procedural vote earlier today all but guarantees a partial DHS shutdown early Saturday morning. With no deal in hand, lawmakers will depart for a previously scheduled recess, though members remain on call to return if negotiations gain traction. 

At the center of the impasse are immigration enforcement policy provisions tied to the DHS bill. While Democrats and the White House have exchanged proposals in recent days, the two sides remain far apart. Democrats are seeking new guardrails on enforcement practices, while Republicans have largely rejected those requests. A separate Republican effort to advance a two-week stopgap measure was also blocked, leaving no clear path forward. 

Absent a last-minute compromise, a lapse in DHS funding could disrupt airport security operations overseen by the Transportation Security Administration and disaster response activities at the Federal Emergency Management Agency. By contrast, Immigration and Customs Enforcement (ICE) and Customs and Border Protection (CBP) – agencies that received significant funding through last year’s budget reconciliation package – would likely see more limited near-term operational impacts. 

Judge Issues Preliminary Injunction Blocking Trump Administration from Freezing California Social Services Funding 

On February 6, a federal judge in New York issued a preliminary injunction blocking the Trump administration from freezing roughly $10 billion in federal funding for child care and social services destined for five Democratic-led states, including California. The ruling bars the administration from withholding Temporary Assistance for Needy Families (TANF/CalWORKs), Child Care and Development Fund (CCDF), and Social Services Block Grant (SSBG) funding while the lawsuit proceeds. 

For their part, Senators Adam Schiff (D-CA) and Alex Padilla (D-CA) recently sent a letter urging the administration to reverse course, warning that the funding freeze unlawfully targets congressionally approved, bipartisan programs and risks significant economic harm to working families. The senators highlighted potential disruptions to child care access, workforce participation, and state budgets, noting that even temporary delays could have lasting impacts on children, seniors, and vulnerable households. 

California Sues to Stop Trump Administration from Rescinding Public Health Grants 

On February 11, California joined Colorado, Illinois, and Minnesota in a lawsuit seeking to block the Trump administration from canceling more than $600 million in grants administered by the Centers for Disease Control and Prevention (CDC). The funding supports public health infrastructure, as well as testing and treatment programs for diseases including HIV. Among the four states, California would experience the largest share of the proposed reductions. 

According to court filings, the proposed rescissions stem from actions by the Office of Management and Budget (OMB), which recently instructed federal agencies to review funding in 14 states – including California – for alignment with administration priorities.  

In addition to the CDC grants, OMB has identified nearly $1 billion in potential cuts to transportation programs and has indicated that further funding cancellations may follow. 

The plaintiff states are seeking a Temporary Restraining Order to prevent the reductions from taking effect while the case proceeds. 

CSAC-Endorsed Bipartisan Transportation Bill Introduced in the House 

Earlier this week, Representatives Kristen McDonald Rivet (D-MI) and Robert Bresnahan (R-PA) introduced legislation designed to provide increased federal transportation resources to counties and other local governments. The bill – known as the Bridges and Safety Infrastructure for Community Success (BASICS) Act (H.R. 7437) – has been referred to the House Transportation & Infrastructure Committee, which is currently in the process of drafting a long-term highway and transit reauthorization measure. 

Among other things, the BASICS Act would increase the percentage of funds that are apportioned from the Highway Trust Fund (HTF) to the Surface Transportation Block Grant (STBG) and the Highway Safety Improvement Program (HSIP). The STBG, which is the most flexible federal-aid highway program, provides funds for local road, bridge, recreational trail, planning, safety, parking, and transit-related projects, among others. The HSIP provides funding for a wide variety of activities and projects that seek to improve highway, road, and pedestrian safety. 

H.R. 7437 also would modify the Federal Highway Administration’s Bridge Formula Program (BFP) by requiring States to suballocate a portion of BFP funds to local governments. This would ensure that counties and cities, which own a majority of bridges that are rated in poor condition, are guaranteed access to funding to repair or replace these critically important assets. 

Finally, the bill would strengthen metropolitan planning organizations by providing MPOs with additional resources and authorities, while also establishing a dedicated rural and nonmetropolitan planning program to enhance support for federally designated regional or rural/regional transportation planning organizations (RTPOs). 

Padilla Introduces Two Bills to Strengthen California’s Water Supply and Drought Resilience 

Last week, Senator Padilla introduced two new bills – the MORE WATER Act and the GROW SMART Act – aimed at strengthening California’s long-term water supply and drought resilience. 

The MORE WATER Act (S. 3738) would reauthorize funding for large-scale and local water recycling projects and would invest in restoring capacity in the California Aqueduct and San Joaquin Valley canals. In addition, the bill would support habitat and floodplain restoration projects to benefit salmon and other fish species, while expanding access to safe drinking water for disadvantaged communities. The bill also streamlines congressional approvals to accelerate project delivery. 

The GROW SMART Act (S. 3737) would authorize funding for voluntary partnerships between farmers and municipal, industrial, or commercial entities to pilot innovative water-saving projects. The legislation would support demonstration projects – such as advanced irrigation strategies, low-water crops, and other efficiency measures – while helping producers manage economic risk through collaborative agreements and new resiliency tools. 

Kiley Requests GAO Review of State Spending 

Congressman Kevin Kiley (R-CA) recently requested that the U.S. Government Accountability Office (GAO) investigate waste, fraud, and abuse involving public funds in California. In a letter to the Comptroller General, Representative Kiley pointed to several high-profile cases and audits that he says raise concerns about the state’s oversight of taxpayer dollars. 

The request cites issues including estimated unemployment insurance fraud during the COVID-19 pandemic, questions surrounding homelessness spending outcomes, and recent prosecutions involving nonprofit, homelessness, and workers’ compensation programs. Specifically, Representative Kiley is asking the GAO to assess the scale of reported fraud since 2016, identify affected sectors such as housing, healthcare, and transportation, examine the types of actors involved, and consider lessons that could inform federal fraud-prevention efforts going forward. 

House to Consider New Voter Eligibility Requirements 

On February 11, the House narrowly advanced legislation – the Safeguarding American Voter Eligibility (SAVE) Act (S. 1383) – that would require individuals to provide proof of U.S. citizenship (i.e. passport or REAL ID-compliant identification cards) when registering to vote in federal elections. While citizenship is already required under current law, most states rely on voter attestation under penalty of perjury rather than documentary proof. The bill would establish new verification requirements and grant election officials access to certain federal databases to support citizenship checks, along with new penalties related to registration compliance. 

In addition to new citizenship verification requirements, the measure would eliminate mail-only voter registration, require photo ID nationwide, mandate new processes to remove noncitizens from voter rolls. The legislation also establishes new enforcement provisions and penalties related to registration compliance. 

For California counties, which are primarily responsible for administering elections, the SAVE Act would introduce significant new administrative responsibilities. These include collecting and verifying proof of citizenship, conducting ongoing voter list maintenance tied to citizenship status, and complying with expanded enforcement provisions. The bill also would create a more uniform federal framework for voter registration, potentially limiting local flexibility, while increasing legal exposure for election administrators through new enforcement mechanisms. It should be noted that the SAVE Act does not authorize additional federal funding to help states or counties implement these requirements. 

Looking ahead, the measure is unlikely to advance in the Senate in its current form, as it remains well short of the 60 votes needed to proceed. In response, a small group of Republicans has urged GOP leaders to consider procedural alternatives, including debating the bill under a so-called “standing filibuster,” a move that would bypass the traditional 60-vote threshold but could result in prolonged or potentially unlimited floor debate. 

SBA Issues New Rule Affecting Local Permitting After Disasters 

The U.S. Small Business Administration (SBA) recently issued an interim final rule allowing federal officials to waive certain state and local permitting requirements for projects financed with SBA disaster loans when approval delays exceed 60 days. The change applies to SBA disaster loans approved on or after January 1, 2025, and is intended to accelerate rebuilding following Presidentially declared disasters. 

Under the rule, if a borrower submits a complete permit or approval application and does not receive a decision within 60 days, the SBA may allow reconstruction to proceed without that specific requirement. It should be noted that the policy is limited to SBA-funded projects and does not waive substantive building codes, health and safety standards, inspections, or certificates of occupancy. 

For counties, the rule raises concerns about federal preemption of local authority in post-disaster rebuilding, particularly around land use, environmental considerations, and long-term hazard mitigation. While the change could help residents and businesses rebuild more quickly, it may also limit counties’ ability to ensure projects align with local resilience and planning priorities. 

The SBA is accepting public comments on the rule through March 2, 2026.