Congress Nearly Cut $1.2 Billion From a Budget DC Already Paid For

Washington, DC raises essentially all of its own budget from its own taxpayers — no state legislature votes on it, no governor signs it.▸ Congress does both jobs, for a city that gets no vote in Congress. In March 2025, that arrangement produced a genuinely absurd result: a routine sentence Congress had included in every prior funding bill for decades got left out of one, and the omission alone nearly forced the District to spend $1.2 billion less than it had already budgeted, taxed its residents for, and appropriated through its own elected council. Congress did not do this on purpose. It also did not fix it for the rest of the fiscal year.

Every full-year continuing resolution funding the federal government has, for decades, carried one extra line for the District: permission to spend its own locally raised revenue at the levels its own council approved, rather than reverting to the prior year's federal appropriations act.▸ The Full-Year Continuing Appropriations and Extensions Act, 2025 (P.L. 119-4) left that line out. As written, it forced DC to spend FY2025 at FY2024 levels for the rest of the fiscal year — even though the District's own FY2025 budget, transmitted to Congress the previous July, had already been raised and appropriated.

The Senate fixed its own mistake fast — it passed the District of Columbia Local Funds Act, 2025 (S. 1077) by voice vote on March 14, 2025, restoring DC's normal spending authority.▸ The House never took it up. Two months later, Delegate Eleanor Holmes Norton was still asking for a floor vote that never came. With no fix arriving from Congress, DC invoked its own fallback: a 2009 home-rule provision letting it raise spending 6% above the prior year's level on its own authority. That closed most of the gap — landing FY2025 execution at $15.521 billion against a $15.872 billion budget, per CRS Report R48609 — but not all of it. The city covered the remaining ~$400 million through a hiring freeze (saving an estimated $63 million), $175 million in cuts to non-personnel services, and $362 million shifted between fiscal years and accounts. It got there without furloughs or layoffs, but the mayor's April 15 order had already told the city administrator to draft a furlough plan in case it didn't. For FY2026, Congress finally wrote the fix back in — Section 136 of the FY2026 continuing resolution explicitly approved DC's own local budget act. One year of self-inflicted crisis bought one year of Congress remembering how its own bill is supposed to read.

The missing clause was a paperwork accident.▸ The revenue hole underneath it is not. Roughly 191,300 federal employees have a workstation in Washington, DC, and 71,226 DC residents work directly for federal agencies — a workforce whose spending, and whose income tax, is baked into every DC revenue forecast. The same week the CR crisis was unfolding, DC's Office of the Chief Financial Officer was rewriting its multi-year revenue forecast to account for the federal layoffs reshaping that workforce. Nationally, more than 75,000 federal employees had accepted buyouts and a hiring freeze allowed only one replacement for every four departures. Locally, the February 2025 Revenue Estimate Letter projected federal employment in DC would fall by approximately 40,000, or 21 percent, by the end of the financial plan — and forecast the District's economy would enter a mild recession in FY2026, with GDP contracting 1.9 percent.

The hole gets bigger the further out the CFO looked — from $21.6 million lopped off the current fiscal year to $363.2 million off FY2028 — because a federal workforce that shrinks 21 percent doesn't just stop drawing a paycheck in DC, it stops paying DC income tax, stops eating at DC restaurants, and stops renting DC office space.▸ Summed across FY2025 through FY2028 alone, that's just over $1 billion written out of the District's own multi-year revenue plan in a single monthly revision.

A year later, the forecast is not a projection anymore.▸ The February 2026 Revenue Estimate shows DC's resident unemployment rate climbing steadily to 6.7 percent in December 2025, and federal-sector jobs were the single largest category of loss in the District's economy in the fourth quarter of 2025 — down about 24,500 positions year over year, three-quarters of the District's entire net job loss that quarter, according to the same CFO presentation citing Bureau of Labor Statistics data. Revenue collections have ticked up slightly this cycle on one-time tax payments, but the underlying trend the CFO flagged in February 2025 — a federal workforce the District's budget depends on, shrinking on a timeline DC's own elected government does not control — is exactly the one still showing up in the jobs numbers a year later.

Dollar figures cover DC's local-fund general and capital budgets, not the separate federal payments Congress makes directly to DC agencies for specific purposes; the FY2026 fix removed the drafting gap that caused the FY2025 near-miss but did not change Congress's underlying annual approval authority over the District's budget.