On May 27th, DC Mayor Muriel Bowser presented emergency changes to the fiscal year 2025 (FY25) budget and her FY26 budget proposal. The announcement comes at a time when DC is facing overlapping budget crises in the immediate FY25 and over the next three years. In March 2025, the Senate passed a continuing resolution (CR) spending bill that would lead to an unexpected $1.1 billion cut to DC’s FY25 budget. While this slash to DC funding was primarily attributed to a mistake in the bill, after almost three months, Congress has yet to reverse the cut. At the same time, the Trump administration’s mass layoffs of federal workers have lowered DC’s revenue estimates by more than $1 billion over the next three years. The DC Council will begin debating both budget proposals and plans to hold a final vote by the beginning of August. 

FY25 Budget: Avoiding Mass Layoffs in the Face of Unexpected Cuts

Initially, DC officials feared they would have to manage the FY25 budget deficit with mass layoffs and significant cuts to services. Luckily, they were able to leverage a 2009 federal budgeting law, which allowed the city to increase spending by 6 percent and reduce FY25’s budget cut to $347 million, instead of $1 billion. Mayor Bowser and her team announced that they had avoided mass layoffs and planned to address the remaining budget gap by instituting temporary hiring freezes and making thousands of cuts to existing contracts and grants. Although Mayor Bowser’s FY25 proposed budget cuts are less drastic than anticipated, organizations and service providers that rely on funding from contracts and grants may face extreme difficulty in serving their communities. The mayor has voiced her intentions to continue pressuring Congress to pass legislation reversing the FY25 budget cut, but for now, the current DC budget remains dramatically decreased. 

FY26 Budget: Investing in Business & Cutting Critical Service Programs

While the DC Council is expected to be sympathetic to Mayor Bowser’s FY25 budget tactics, her FY26 budget proposal has received criticism from several council members and the public. Mayor Bowser unveiled a $21.8 billion FY26 budget that invests heavily in pro-business policies designed to boost the economy, while making significant cuts to programs and services that serve DC’s most vulnerable residents. 

In an effort to reverse a potential recession and move away from dependence on the federal workforce, the FY26 budget provides incentives for businesses while cutting approximately $250 million in “unsustainable” programs. Some of the programs subject to steep cuts include the emergency rental assistance program (ERAP) and a legal assistance fund for people facing eviction and domestic violence. Other programs, such as the Child Tax Credit and Pay Equity Fund for early educators, will be completely eliminated. The proposal also makes changes to eligibility requirements for Temporary Assistance for Needy Families (TANF) and Medicaid. These changes are estimated to cause 25,000 residents to be removed from Medicaid and likely many low-income families to lose TANF benefits. 

Looking to the Future

Although these proposed cuts to grant funding and critical service programs are deeply concerning, both the FY25 and FY26 budgets still need to be debated and approved by the DC Council. At Housing Up, many of the families we serve rely on programs like TANF, ERAP, and Medicaid. During a time when more than 5,000 people in DC are experiencing homelessness, we need increased investment in programs that ensure vulnerable residents can stay housed and have equitable access to healthcare, food, and other critical essentials. Despite these challenging times in our city, Housing Up remains committed to providing safe and affordable housing to DC’s most vulnerable families.