Federal Update: Senate Faces Key Decisions Ahead of August Recess 

Before adjourning last week for the August recess, the House approved a budget resolution that would allow Republicans to pursue approximately $95 billion in new spending through the party-line reconciliation process. The framework includes roughly $73 billion for defense and intelligence activities, including support for U.S. military operations involving Iran; $12 billion for agricultural assistance; and $10 billion for election-related initiatives that would likely incentivize states to adopt new voter-identification and proof-of-citizenship requirements for federal elections. 

The resolution faces a significantly more uncertain path in the Senate. Senate Majority Leader John Thune (R-SD) has indicated that Republicans do not currently have the votes needed for passage, with several GOP senators raising concerns about the overall spending level, the lack of offsets and the procedural difficulty of advancing election-related policies through the reconciliation process. Senate leaders have also suggested that avoiding a government shutdown will take precedence over moving another reconciliation package. 

The House separately passed a short-term continuing resolution that would fund the federal government beyond the September 30 deadline and into early December. Because the measure will require 60 votes in the Senate, Republicans will need Democratic support and are expected to negotiate changes before returning the bill to the House. 

Meanwhile, the Senate Agriculture Committee is expected to consider its long-delayed farm bill reauthorization measure next week. A key point of debate will likely be whether to delay the Supplemental Nutrition Assistance Program (SNAP/CalFresh) state cost-sharing requirements enacted through H.R. 1. For their part, Democrats on the panel have threatened to withhold support unless the bill postpones implementation of the provisions requiring states to assume a share of SNAP benefit costs. 

The Senate is scheduled to begin its August recess at the conclusion of legislative business next week, leaving lawmakers with a limited window to act, although some decisions could be deferred until the chamber reconvenes in September. 

Trump Administration Withholds $867 Million in Medicaid Payments to California 

Last week, the Trump administration announced that it is withholding more than $867 million in Medicaid (Medi-Cal) payments from California, citing spending growth that far exceeded national trends for in-home care services and other claims that require additional documentation. 

The agency intends to defer payments until the state provides additional information supporting the claims’ legitimacy. The deferral follows a similar action targeting an additional $1.3 billion in claims, first announced in May. Those funds remain frozen as the state continues to work with the administration to provide satisfactory documentation. 

DHS Finalizes Public Charge Regulation 

The U.S. Department of Homeland Security (DHS) recently issued a final rule changing how immigration officials may determine whether someone is likely to become a “public charge.” Public-charge determinations can affect applications to enter the United States or obtain lawful permanent resident status. 

The final rule rescinds the Biden administration’s 2022 policy, which generally limited consideration to an applicant’s use of cash assistance or government-funded long-term institutional care. Rather than establishing a new, detailed definition through formal rulemaking, DHS plans to issue separate guidance without a public comment period. 

Under the new approach, immigration officers will have broad discretion to consider an applicant’s use of public benefits. While DHS does not plan to identify specific benefits that will be automatically excluded from consideration, it may include participation in programs funded by state or county governments. 

DHS estimates the rule could reduce federal and state benefit spending by approximately $13 billion annually. Because many immigrants who do not yet have green cards are already ineligible for most public benefits, much of the projected reduction is expected to result from eligible U.S. citizens and lawful permanent residents, particularly children, avoiding assistance out of concern that participation could affect their own or a family member’s adjustment of status. Legal challenges to the final rule are expected. 

California Lawmakers Urge FCC to Preserve Carrier-of-Last-Resort Rules 

A bipartisan group of 28 members of California’s congressional delegation recently urged the 

Federal Communications Commission (FCC) to reject AT&T’s effort to discontinue traditional landline service and override the state’s carrier-of-last-resort (COLR) protections. The lawmakers warned that the proposal could affect approximately 184,000 residential and 15,000 business accounts, including many in rural and disaster-prone communities. 

Under California’s COLR rules, AT&T must make basic telephone service available to customers throughout its designated service territory. The requirements do not force the company to maintain copper lines indefinitely and allow service to be provided through fiber, wireless, internet-based phone service or another technology. However, the California Public Utilities Commission (CPUC) has maintained that AT&T cannot withdraw unless customers continue to have access to safe, reliable and affordable basic service. In June 2024, the CPUC rejected AT&T’s earlier withdrawal request after finding that the company had not identified replacement providers willing and able to serve every affected customer. 

AT&T has since asked the FCC to approve the discontinuance of its legacy copper network, relieve it of certain federal obligations and preempt state requirements that could block the transition. While AT&T has proposed moving customers to newer technologies, lawmakers argue that wireless alternatives may rely on commercial power and cellular towers that can fail or become congested during wildfires, earthquakes, and prolonged outages. 

The congressional letter followed a federal judge’s decision denying AT&T’s request to temporarily block California from enforcing its rules while the company’s lawsuit proceeds. California’s protections remain in place for now, but the FCC’s pending decisions and ongoing litigation will determine whether AT&T can ultimately end service without complying with the state’s COLR requirements. 

Judge Declines to Block New Medicaid Work Requirement Rule 

A federal judge has refused to temporarily block a new Medicaid rule issued by the Centers for Medicare and Medicaid Services (CMS) governing the program’s work requirements. The lawsuit, filed by California and several other Democratic-led states, argues that the rule provides fewer protections for medically frail individuals than Congress intended and was issued without following the proper federal rulemaking process. 

The states also argue that CMS did not fully consider how the rule could affect state budgets, Medicaid beneficiaries, healthcare providers, and state healthcare systems. In addition, they contend that CMS imposed new requirements after states had already begun preparing to implement H.R. 1 based on the law itself and earlier federal guidance. 

The decision is a setback for the states, which had asked the court to pause the rule while the lawsuit moves forward. For now, CMS may continue implementing it. However, the judge did not decide whether the rule is ultimately legal and acknowledged that the lawsuit raises “difficult issues,” including questions about whether the rule reflects congressional intent. 

In his ruling, the judge also committed to an expedited schedule that will allow the lawsuit to be decided before the implementation deadline of January 1, 2027. 

FEMA Revises Equipment Reimbursement Rates for California 

In response to concerns raised by state and local officials, FEMA recently announced revisions to its equipment reimbursement rates for California. The updated methodology incorporates California-specific wage and contracting data, state equipment rates, and more realistic assumptions regarding equipment lifespan and salvage value. As a result, local fire departments and other responding agencies are expected to receive higher reimbursements that more accurately reflect the actual cost of deploying personnel and equipment during emergencies. 

The changes respond to concerns stemming from FEMA’s July 2025 nationwide rate update, which substantially reduced reimbursement rates for many fire engines and support vehicles deployed under the California Fire Assistance Agreement. County and local officials warned that the lower rates could leave agencies responsible for significant unreimbursed costs and, over time, undermine participation in California’s statewide mutual aid system. 

Although FEMA did not adopt every adjustment requested by California stakeholders, the announcement represents meaningful progress toward reducing the financial burden on local governments. 

Bipartisan Bill Would Expand Use of Prescribed Fire 

Senators Alex Padilla (D-CA) and John Curtis (R-UT) recently introduced bipartisan legislation – the Wildfire Emissions Prevention Act of 2026 (S. 5045) – aimed at making it easier for states and local communities to use prescribed fire to reduce hazardous fuels and prevent larger, more destructive wildfires. 

The bill would clarify that states should not be penalized under federal air quality rules for emissions associated with approved prescribed burns. It would also help states use air quality resources more efficiently and encourage proactive forest management intended to protect communities, improve ecosystem health, and reduce the long-term smoke and pollution caused by catastrophic wildfires.