President’s FY 2027 Proposed Budget Identifies $73B in Cuts

By Karen Norris, Principal, Kanoco Consulting, https://kanoco.com

Congress is actively reviewing the White House’s proposed federal fiscal year (FY) 2027 federal budget, and if approved as written, would result in another $73 billion reduction, or 10%, to non-defense discretionary funding. This latest strategy builds upon the deep cuts realized in the FY 2025 and 2026 federal budgets.

The proposed FY 2027 budget further reflects the policies set in motion in August 2025 under Executive Order (EO) 14322, Improving Oversight of Federal Grantmaking, which called for greater oversight of federal grants and accountability. The EO also announced a planned revision of the uniform guidance, and that proposed rule was released on May 29 for public comment.

FY 2025 and FY 2026 Funding Trends

During the last weeks of the Biden administration in December 2024, Congress passed a continuing resolution (CR) to avoid a shutdown and to keep the government running until March 14, 2025. By January 2025, however, the Trump administration began its term in office, and the decision-making process about the CR took an entirely different turn. CRs generally fund the government at the last approved budget level, but the Trump administration was not inclined for another CR and pushed for approval of a formal FY 2025 budget amidst heated debate in the Senate. Despite the resistance, Congress voted to pass the FY 2025 budget on March 14, avoiding a government shutdown, but with a contentious $13 billion in reductions.

For this federal fiscal year, Congress passed the FY 2026 budget with $163 billion in reductions, or 22.6%, in non-defense discretionary funding, adversely impacting financial assistance across the federal government. More than 188,000 federal employees and contractors were terminated. Some of the FY 2026 budget cuts will not take effect until after the mid-term elections on Nov. 3, delaying the full impact of the reductions after voting has occurred.

FY 2026 Congressional Voting Trends

Budgets are passed in two steps: (1) a resolution, and (2) appropriations. Once the House and Senate agree on taking action, the approved budget bill is called a joint resolution or concurrent resolution and is forwarded to the president for signature. After signature, the newly passed budget resolution goes back to Congress for appropriations.

With a Republican majority in both the House and Senate, how easy was it for Congress to pass the FY 2026 budget resolution? Read on. The House passed the budget May 22, 2025, by just one vote, 215 to 214 (429 votes total). It is interesting to note that the House has 435 voting members, which means six members did not vote, a surprising turn of events. The Senate was split 50/50. Vice President J.D. Vance, who serves as president of the Senate, had to cast the tie-breaking vote, another surprising turn of events. The Senate passed the budget resolution by that one vote on July 1, 2025. Congress forwarded the concurrent resolution to President Trump, who signed the bill into law on July 4, 2025.

Next, the approved budget returned to Congress for appropriations, to be completed by the Oct. 1, 2025, start of the federal fiscal year. Congress could not agree on funding levels and needed to approve agency budgets in incremental groups rather than as a total budget package, again a surprising turn of events. This measured and debated process extended well beyond Oct. 1, 2025, causing multiple partial government shutdowns until Apr. 30 when the Department of Homeland Security was the last agency to receive its appropriation. Congress finally completed the $1.2 trillion full funding package.

EO 14332, the Budget, and the Proposed Uniform Grant Regulation

EO 14332 listed the programmatic terms that were out of favor with the presidential administration, including: Diversity, Equity, and Inclusion (DEI), race, gender/transgender, woke, foreign assistance and illegal immigrant. The reductions in funding in the FY 2025, FY 2026 and proposed FY 2027 federal budgets relate to these programmatic terms. The proposed Uniform Grants Regulation also reflects disfavor with these programmatic terms. As the proposed FY 2027 budget and Uniform Grants Regulation are approved, the new language will be codified into law.

Congress will be engaged in appropriations debates for the next four months with the goal of completion by Oct. 1. Public comments on the revised Uniform Grants Regulation are due July 13, with the goal of completion by Oct. 1. With voting so close in Congress and with public comments due for the Uniform Grants Regulation, now is the time for advocacy efforts, if these matters are important to your organizations.

For More Information

The president’s proposed FY 2027 budget, including a list of programs that are reduced or eliminated for each federal agency, can be accessed at: https://www.whitehouse.gov/omb/information-resources/budget.

For EO 14332, go to https://www.whitehouse.gov/wp-content/uploads/2026/04/budget_fy2027.pdf .

Real-time appropriations status can be tracked at https://www.congress.gov/crs-appropriations-status-table.

Karen Norris is nationally recognized in the grants community as a consultant and Subject Matter Expert (SME) for Kanoco Consulting, LLC - a Karen Norris Company in Gaithersburg, MD and Lewes, DE. She has experience in grants and contracts for more than 30 years, previously as a grants administrator for educational institutions in the State of Maryland, as an author and managing editor for Thompson Grants, and currently as a consultant. Norris has served on the Board of Directors of professional associations and editorial advisory boards. She is an invited annual presenter at national conferences and regional training events, including the Grant Professionals Association, National Grants Management Association, Management Concepts, California Governor's Grants Office, and others. The White House Conference on Aging published her white paper about health grants. Norris has provided testimony to the Maryland General Assembly supporting legislation about the de minimis indirect rate, and has responded to information requests about the grants process from the U.S. Senate Subcommittee on Federal Financial Management and the House Committee on Oversight and Accountability. Norris has served as a federal reviewer for the U.S. Department of Education and the U.S. Department of Agriculture.