Senate Sends Amended $9 Billion Rescissions Package Back to House for Final Vote

Earlier today, the Senate approved a White House-backed proposal to rescind $9 billion in previously appropriated federal funding, advancing the measure on a narrow 51-48 vote. Senators Lisa Murkowski (R-AK) and Susan Collins (R-ME) joined all Democrats in opposing the bill, citing concerns over the scope and impact of the proposed cuts.

The package targets a wide range of domestic and international programs, including funding for public broadcasting and foreign aid. The original $9.4 billion proposal was scaled back after bipartisan pushback led to the removal of a controversial $400 million cut to PEPFAR, the U.S. global health initiative aimed at combating HIV/AIDS.

While the rescissions package received support from most Republicans, lawmakers across the aisle have voiced concern over the precedent it sets. Critics argue that allowing the executive branch to claw back previously appropriated funds could erode congressional authority over federal spending.

Democrats have been especially vocal, warning that the move undermines Congress’s constitutional authority over federal appropriations. For his part, Senate Minority Leader Chuck Schumer (D-NY) warned that advancing the measure could jeopardize progress on a broader FY26 spending agreement and heighten the risk of a government shutdown this fall.

Because the Senate adopted amendments to the House-passed bill, the revised legislation must now return to the House for final approval. Lawmakers in the lower chamber are expected to vote on the amended package ahead of the July 18 deadline.

Federal Agencies Tighten Immigration Rules for Access to Public Benefits

The Department of Health and Human Services (HHS), along with the Department of Agriculture (USDA), Department of Labor (DOL) and the Department of Education (ED), have announced new immigration-related restrictions on a range of federally funded programs. The agencies are updating their interpretation of the 1996 Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), which is a law that limits eligibility for “federal public benefits” to U.S. citizens and a narrow group of “qualified” immigrants.

For nearly three decades, federal agencies have exercised discretion in how they classify certain programs under PRWORA, allowing broader access – particularly for non-citizens, including undocumented individuals. However, under the new guidance released last week, that discretion is being rolled back. The updated interpretation will newly classify many programs as “federal public benefits,” triggering citizenship and immigration verification requirements and restricting access for non-citizens, including individuals who were previously eligible.

It should be noted that PRWORA’s restrictions already apply to major programs such as Medicaid (Medi-Cal), the Supplemental Nutrition Assistance Program (SNAP/CalFresh), the Temporary Assistance for Needy Families (TANF/CalWORKs), HUD rental assistance, and Supplemental Security Income (SSI). The law generally bars non-citizens from receiving benefits under these programs and imposes a five-year waiting period for lawful permanent residents, with limited exceptions.

The new policy extends similar restrictions to a broader array of programs. Some grantees may now be required to screen for or verify immigration status as a condition of eligibility for affected services, though additional guidance is needed to inform implementation. The links above outline the programs affected by the new policy. For instance, HHS programs include Head Start, Community Health Centers, the Community Services Block Grant, Community Action Agencies, a wide range of substance abuse, behavioral and mental health programs, federal adoption and guardianship assistance programs, and supports for youth aging out of foster care.

House Appropriators Advance FY26 Spending Bills

This week, the House Appropriations Committee continued work on its fiscal year (FY) 2026 spending bills. As of this writing, the full committee is actively considering two measures – the Transportation-Housing and Urban Development (T-HUD) and Energy and Water Development appropriations bills – both of which are expected to advance on a party-line vote. Several additional bills also moved forward at the subcommittee level.

On July 15, Chairman Tom Cole (R-OK) also released updated subcommittee allocations for FY26. Under the current House plan, overall discretionary spending would be reduced by $45 billion compared to FY25 levels. Nondefense programs would see a nearly 6 percent reduction, bringing that topline to $705.6 billion, while total discretionary funding – including defense – would reach approximately $1.6 trillion.

By comparison, the President’s budget proposal called for a steeper reduction in nondefense discretionary spending – approximately $163 billion, or 23 percent – while maintaining flat funding for defense. Overall, that plan would have cut discretionary spending by about 10 percent below the levels enacted for FY25.

Despite the progress this week, Congress is expected to need a short-term funding patch to keep the government open past the end of September.

A few key highlights are summarized below:

Transportation-Housing and Urban Development

The House T-HUD spending bill proposes $89.9 billion in discretionary funding for the Department of Transportation (DOT), the Department of Housing and Urban Development (HUD), and related agencies in FY26. This would be roughly $4.5 billion below the fiscal year 2025 enacted level.

Department of Transportation

The measure includes $22.1 billion in discretionary funding for DOT, which is $3.1 billion below current levels and $4.7 billion below the President’s budget request. When combined with $83.3 billion in obligation limitations for highway and airport trust fund programs, the bill provides a total of $105 billion in transportation-related budgetary resources.

Several DOT subagencies would see funding increases under the bill. For example, the Federal Highway Administration (FHWA) would receive $64.4 billion, which would be nearly $2 billion more than current levels. The Federal Aviation Administration (FAA) would be in line for $23.3 billion, an increase of $2.3 billion over FY25. The Federal Railroad Administration (FRA) would also receive a modest funding boost. On the other end of the spectrum, the bill would provide $14.9 billion in total budgetary resources for the Federal Transit Administration, which amounts to a nearly $1.8 billion cut.

It should be noted that the legislation encourages DOT to streamline its competitive grant application process by developing a “common application” for smaller and rural applicants. It also includes a policy rider prohibiting the use of federal funds for California’s high-speed rail project, a move that aligns with the Trump administration’s recent decision to revoke $4 billion in previously awarded federal funding for the project.

Department of Housing and Urban Development

The bill proposes $67.8 billion in discretionary funding for HUD, representing a $939 million decrease from the FY25 enacted level. Several major programs would see significant reductions or eliminations. The HOME Investment Partnerships Program, a key flexible funding source for affordable housing, would receive no new funding, based on the rationale that billions from the American Rescue Plan Act remain unspent. The Choice Neighborhoods Initiative would be eliminated entirely. The Housing Choice Voucher Program (also known as Section 8) would be flat-funded at just over $32 billion, although administrative fees would be reduced by nearly $800 million.

Some HUD programs would see increases. For example, the Project-Based Rental Assistance program would receive just over $17 billion, an increase of $237 million from FY25. Homeless Assistance Grants would rise by $107 million to a total of almost $4.2 billion. The bill also encourages HUD to prioritize programs that address mental health and substance use disorders, foster accountability, and support pathways to self-sufficiency. In terms of community development, the bill includes $3.3 billion for the Community Development Block Grant (CDBG) formula program, consistent with current funding levels.

Finally, it should be noted that the bill would eliminate the U.S. Interagency Council on Homelessness (USICH). USICH is tasked with coordinating the federal interagency response to homelessness.

Energy and Water Development

In addition to T-HUD, the House Appropriations Committee is also on track to advance its fiscal year 2026 Energy and Water Development spending bill, which would provide $57.3 billion in discretionary funding for the Department of Energy (DOE), U.S. Army Corps of Engineers, Bureau of Reclamation, and related agencies. This represents a reduction of approximately $766 million compared to the FY25 enacted level.

Department of Energy (DOE)
The bill proposes $48.8 billion for the Department of Energy (DOE), which is $1.4 billion below the FY25 enacted level but $2 billion above the administration’s FY26 budget request. While overall funding remains relatively stable, the bill reflects a notable shift in DOE priorities. It increases investments in nuclear energy, critical mineral development, and national security-related programs, while significantly scaling back funding for several clean energy and technology demonstration initiatives.

Specifically, the bill would eliminate funding for the Office of Clean Energy Demonstrations and reduce the Office of Energy Efficiency and Renewable Energy (EERE) by nearly 50 percent. Both offices have played a key role in implementing programs under the Bipartisan Infrastructure Law and the Inflation Reduction Act, supporting state and local efforts to modernize the electric grid, improve building energy efficiency, and accelerate energy innovation.

The Office of Grid Deployment would also see its budget reduced by more than half, while the Office of Electricity would receive a nearly 20 percent cut. The Office of Fossil Energy and Carbon Management, which supports research and development for carbon capture and other fossil fuel-related technologies, would receive approximately $688 million, down $178 million from current levels.

U.S. Army Corps of Engineers
The bill includes nearly $9.9 billion for the U.S. Army Corps of Engineers, an increase of over $1 billion relative to current funding levels. Within that amount, roughly $2 billion is directed to flood and storm damage reduction activities.

Bureau of Reclamation
The Bureau of Reclamation and related Interior Department activities would receive a total of nearly $1.9 billion, slightly above the FY25 enacted level. That total includes nearly $127 million for rural water supply projects and $201 million for water storage initiatives authorized by the Water Infrastructure Improvements for the Nation (WIIN) Act, which supports expanded water storage capacity in drought-prone regions.