Government Shutdowns & Continuing Resolutions

A government shutdown occurs when Congress fails to pass appropriations bills — or the President refuses to sign them — before the fiscal year deadline (October 1) or before a continuing resolution expires. Without appropriations, the Antideficiency Act (31 U.S.C. § 1341) prohibits federal agencies from spending money they don't have, forcing them to cease non-essential operations and furlough employees. Since 1976, there have been over 20 funding gaps, with the longest — 35 days in 2018-2019 — affecting 800,000 federal workers and disrupting services from national parks to tax refunds. Continuing resolutions (CRs) are temporary stopgap funding measures that keep the government running at prior-year levels when full-year appropriations haven't been enacted.

Current Law (2026)

Parameter	Value
Fiscal year	October 1 – September 30
Appropriations bills	12 annual bills funding the federal government
Antideficiency Act	31 U.S.C. §§ 1341-1342 — prohibits spending without appropriation
Criminal penalty	Knowing and willful violation: up to $5,000 fine and 2 years imprisonment
Administrative penalty	Suspension or removal from office
Essential employees	Must continue working without pay during a shutdown
Furloughed employees	Sent home; historically receive back pay after shutdown ends
Back pay guarantee	Federal Employee Fair Treatment Act (2019) guarantees back pay for furloughed workers
Federal contractors	No statutory back pay guarantee
Continuing resolution	Temporary funding at prior-year levels; set by Congress for specific duration

Legal Authority

31 U.S.C. § 1341 — Limitations on expending and obligating amounts (no federal officer or employee may make or authorize an expenditure or obligation exceeding available appropriations, or involve the government in a contract for payment of money before an appropriation is made — the core Antideficiency Act prohibition)
31 U.S.C. § 1342 — Limitation on voluntary services (federal agencies may not accept voluntary services or employ personal services beyond those authorized by law, except in emergencies involving safety of human life or protection of property)

How It Works

The federal government operates on a 12-bill appropriations cycle. Each fiscal year, Congress is supposed to pass 12 separate appropriations bills (Defense, Labor-HHS-Education, Transportation-HUD, etc.) funding all discretionary government operations. When all 12 aren't signed into law by October 1, agencies covered by the missing bills have no legal authority to spend money.

The Antideficiency Act turns this funding gap into a shutdown. The Act makes it a criminal offense for federal officials to spend money that hasn't been appropriated. When appropriations lapse, agencies must shut down non-essential functions within a matter of hours. OMB issues guidance on which activities can continue and which must stop.

Essential employees — those performing functions related to safety of human life, protection of property, or activities funded by sources other than annual appropriations — must continue working even without pay. This includes military personnel, law enforcement, air traffic controllers, border patrol, and certain healthcare workers. Excepted employees perform functions deemed necessary by agency heads. Everyone else is furloughed — placed on unpaid leave and prohibited from working.

Continuing resolutions are the escape valve. When Congress can't agree on full-year appropriations, it passes a CR — a temporary measure that funds the government at the prior year's level (or a modified level) for a set period, typically weeks to months. CRs prevent shutdowns but create their own problems: agencies can't start new programs, adjust funding levels, or plan effectively under short-term funding. Some fiscal years have been funded entirely by CRs without ever receiving full-year appropriations.

The impact of shutdowns extends well beyond federal workers. National parks close, passport processing slows, SBA loans stop, IRS refunds are delayed, food safety inspections may be reduced, and federal courts eventually run out of carryover funds. Federal contractors — who employ millions of people on government work — face work stoppages and have no statutory back pay guarantee.

Back pay for federal employees is now guaranteed by the Government Employee Fair Treatment Act of 2019, enacted after the 35-day shutdown. Furloughed employees receive their full pay retroactively once the government reopens. However, this guarantee doesn't extend to federal contractor employees, creating a two-tier system.

How It Affects You

If you're a federal employee facing furlough: The first thing to know is whether you're furloughed (sent home, prohibited from working) or excepted/essential (required to report without pay). Your agency's contingency plan — published before any shutdown — determines your status. Air traffic controllers, TSA officers, Border Patrol, military personnel, and law enforcement are almost always excepted. Administrative, policy, and support staff at non-defense agencies are typically furloughed.

Back pay is guaranteed under the Government Employee Fair Treatment Act of 2019 (enacted specifically because of the 35-day 2018-2019 shutdown) — you will eventually receive every dollar you missed. But the gap creates real hardship. During the April 2026 DHS shutdown, many employees went 6+ weeks without paychecks. Practical steps:

Contact your federal credit union immediately — NFCU, Pentagon Federal, State Department FCU, and most others offer emergency zero-interest loans specifically for federal employees during shutdowns. These don't require credit checks and are repaid automatically from back pay.
Call your mortgage servicer and credit card companies. Most have hardship forbearance programs for federal employees — they've seen this before. Ask specifically for "shutdown forbearance," not just general hardship relief.
Do not rack up credit card debt waiting for back pay. The zero-interest union loan is almost always the better option.
Check opm.gov for the latest guidance on FEHB health insurance premium grace periods during shutdowns (coverage continues, premium debt is resolved when the government reopens).
Essential/excepted employees who work without pay can file claims through their agency's payroll office once appropriations are restored; back pay is processed automatically.

One critical distinction: furloughed employees are prohibited from voluntarily working during a shutdown — doing so is itself an Antideficiency Act violation. Don't answer work emails, access work systems, or perform job duties even informally.

If you're a federal contractor or subcontractor: You are in the most precarious position — there is no statutory back pay guarantee for contractor employees. Whether you get paid during a shutdown depends entirely on your contract type and your employer's financial cushion.

Cost-plus contracts (common in defense and R&D): the government owes you money for work performed, but can't authorize new expenditures during a shutdown. Your prime contractor may absorb costs for a period; government reimbursement happens retroactively once appropriations are restored. Request an equitable adjustment (REA) after the shutdown for any costs incurred.

Fixed-price contracts: work stops, payment stops. If your contract has a "stop work order" clause (most do under FAR 52.242-15), the contracting officer may issue one — preserving your right to an equitable adjustment for delay costs. If no stop work order is issued and you stop work anyway, document everything.

Small businesses face acute liquidity risk — unlike large prime contractors, you likely don't have the reserves to float payroll through an extended shutdown. Apply for SBA Economic Injury Disaster Loans (EIDL) after the shutdown ends if business was significantly disrupted. During the 2018-2019 shutdown, Congress passed supplemental legislation providing some contractor relief — watch for similar provisions in shutdown-ending legislation.

Monitor sam.gov and your agency contracting officer for guidance on each specific contract. Don't make unilateral decisions about continuing or stopping work without written direction.

If you depend on federal services: Which federal services survive a shutdown and which don't depends on how they're funded:

Programs that continue (mandatory spending — not subject to annual appropriations): Social Security benefit payments, Medicare and Medicaid, Veterans health care, military pay, SNAP food benefits (for approximately 30 days using prior-year carryover), TANF (varies by state), and interest on the national debt.

Programs that stop or slow significantly: IRS tax refund processing (returns can be filed but refunds are delayed), passport and visa processing (slows dramatically — State Department can process on fee-funded basis but staff is reduced), SBA loans, federal housing administration (FHA) loan approvals, USDA agricultural loan approvals, CDC disease surveillance programs, National Park Service (parks close — entrance fee revenue doesn't cover operating costs), federal court operations (courts typically have carryover funds for 2-3 weeks), federal housing courts, and most federal regulatory activity.

What to do: If you need a passport urgently, apply or renew before any threatened shutdown deadline. If you're expecting an IRS refund, file as early as possible. If you have an SBA loan application pending, ask your lender about delays and whether a bridge loan makes sense. If you need access to a national park and a shutdown is imminent, call ahead.

If you're a member of Congress or tracking congressional pay: The 27th Amendment — ratified in 1992 — prohibits Congress from changing its own pay in a way that takes effect before the next election. This means Congress technically cannot reduce its own pay during a shutdown. Members who voluntarily donate or defer pay (as many did during the 2018-2019 shutdown) do so individually. Several pending bills (SJRES 94, SRES 493, SRES 526, HR 5792, HR 8140) would require pay to be withheld, escrowed, or forfeited during shutdowns — none has passed as of 2026.

If you're a business owner or investor monitoring economic impacts: Shutdown duration matters enormously. Short shutdowns (under 2 weeks) typically produce minimal lasting economic damage — activity catches up when the government reopens. Extended shutdowns create compounding damage:

The 2018-2019 35-day shutdown cost an estimated $11 billion total, with approximately $3 billion permanently lost (never recovered) — primarily from delayed government services, reduced small-business sales near federal facilities, and decreased consumer confidence.
Financial markets typically don't react dramatically to shutdowns alone (government spending is a smaller share of GDP than widely believed), but shutdowns combined with debt ceiling brinksmanship create serious market stress.
Industries most exposed: federal contractors, tourism near national parks, seafood industry (NOAA permits delayed), real estate transactions (FHA/VA loan processing), and any business dependent on federal regulatory approvals.
A 50-day shutdown (as in April 2026) imposes meaningfully larger costs — economic modeling suggests damages roughly proportional to duration, with compounding effects from contractor layoffs and reduced business confidence.

Monitor the Congressional Budget Office (cbo.gov) for post-shutdown economic impact analyses, typically published within weeks of a shutdown's end.

State Variations

Government shutdowns are exclusively a federal phenomenon, but states face their own versions:

Several states have experienced government shutdowns when legislatures and governors couldn't agree on budgets
State shutdown mechanics vary — some states have constitutional provisions preventing shutdowns
Most state employees are not covered by the federal back pay guarantee
State-dependent programs funded through federal pass-through (Medicaid, SNAP, education) may be affected if federal funds are interrupted

Implementing Regulations

Government shutdowns and continuing resolutions are governed by the Antideficiency Act (31 U.S.C. §§ 1341–1342, 1511–1519) and OMB guidance. OMB Circular A-11 and individual agency contingency plans govern shutdown implementation. 31 CFR Part 3 addresses certain debt management during funding gaps.

Pending Legislation

HR 7147 — Further Additional Continuing Appropriations Act, 2026: FY2026 DHS funding package with major disaster money, emergency grants, and oversight provisions. Status: Resolving differences.
HR 5870 — Prevent Government Shutdowns Act: create automatic short-term funding during appropriations gaps with travel and procedural limits on Congress. Status: Introduced.
SJRES 94 — Constitutional amendment requiring Members of Congress to forfeit pay during federal appropriations lapses, with forfeited pay applied to debt reduction. Status: Introduced.
SRES 493 — Reduce Senators' annual pay by one day's salary for each day of a government shutdown, effective after November 2026 election. Status: Introduced.
SRES 526 — Withhold Senators' pay during government shutdowns, releasing it only when the lapse ends. Status: In committee.
HR 5792 (Rep. Wilson, D-FL) — Government Shutdown Salary Suspension Act: hold congressional and presidential pay in escrow during shutdowns. Status: Introduced.
HR 8140 — Prohibit pay of Members of Congress during government shutdowns. Status: Introduced.
HR 6023 — Government Shutdown Efficiency Act: allow the President to sell federal real estate during funding lapses to pay exempt employees. Status: Introduced.
HR 5998 — Keep the OSC Hatch Act Unit operating during funding lapses by treating its work as emergency services. Status: Introduced.
HR 7617 — Fund DHS administrative offices during any FY2026 appropriations lapse. Status: Introduced.
HR 7844 — Let DHS Secretary transfer unused funds across DHS accounts during a funding lapse (excluding ICE, CBP). Status: Introduced.
HRES 802 (Rep. Moskowitz, D-FL) — Require daily House sessions during shutdowns with recorded attendance and fines for absent Members. Status: Introduced.

Recent Developments

Record-length DHS shutdown (2026): A partial government shutdown — affecting the Department of Homeland Security and several other agencies — reached approximately 50 days in April 2026, surpassing the previous record 35-day shutdown of 2018–2019. The dispute centered on funding levels for ICE detention beds, border enforcement, and the 2025 reconciliation package's immigration provisions. As the shutdown dragged on, President Trump directed DHS to pay all employees via presidential memorandum — raising constitutional questions about whether the President can direct spending contrary to the Antideficiency Act. Congress ultimately passed a continuing resolution ending the shutdown, though appropriations battles continued. Federal employees who worked without pay were entitled to back pay under the Government Employee Fair Treatment Act (enacted after the 2018-2019 shutdown).
One Big Beautiful Bill and appropriations: The Trump administration's "One Big Beautiful Bill" reconciliation package addressed taxes, immigration, defense, and energy in a single vehicle — but the reconciliation process cannot fund regular government operations (it governs mandatory spending and taxes, not discretionary appropriations). The regular FY2026 appropriations process lagged behind, with Congress passing multiple CRs instead of the regular 12-bill appropriations process. Reliance on CRs means agencies operate at prior-year funding levels without new policy direction.
Impoundment battles: The Trump administration's efforts to impound (withhold) appropriated funds — particularly for foreign aid, clean energy grants, and programs the administration opposed — created direct constitutional conflict with the Impoundment Control Act. Courts issued injunctions requiring the administration to spend appropriated funds. The administration's position that the President has inherent authority to withhold appropriated funds represents the most direct challenge to the Impoundment Control Act since Nixon, when Congress enacted it in 1974 specifically to prevent such executive withholding.
CR vs. regular process: The FY2026 budget year continued on a patchwork of CRs rather than regular appropriations bills. CRs lock in funding at prior levels — preventing new program starts, restricting new contracts, and creating planning problems for agencies. The inability of Congress to complete the regular appropriations process has become the norm rather than the exception.