Boston, September 26, 2025
News Summary
Massachusetts officials are bracing for a possible federal government shutdown as the fiscal year ends. A memo was issued to state departments urging preparation for payroll concerns and resource protection. The deadline for departmental responses is set for September 30. The state budget heavily relies on federal funding, raising concerns over Medicaid and other essential services if Congress fails to act before October 1. A public hearing will be held to discuss the economic implications of potential funding interruptions.
Boston — Massachusetts state government officials are preparing for a possible federal government shutdown as the federal fiscal year ends on September 30.
Key developments and immediate actions
A memo was issued by the Office of the Comptroller and the Executive Office of Administration and Finance on September 23, instructing departments to summarize concerns regarding payroll and resource protection. Responses to the memo are due by Tuesday, September 30, by 5:00 pm. The memo highlights that Congress has not passed any of the 12 full-year appropriations bills required to fund the federal government as of the October 1 deadline.
The memo indicates that agencies should prepare for the possibility that federal operations may not be authorized beyond October 1. The memo advises agencies to assess their capability to cover payroll for employees reliant on federal funds and to identify any additional state funding that may be required. A public hearing is scheduled at the State House on September 30, before the deadline, to discuss economic implications of federal funding changes.
What would change in a shutdown
In case of a shutdown, federal agencies are instructed to cease all non-essential discretionary functions, although essential services, such as Social Security, will continue. Potential vulnerabilities in funding due to a shutdown include Medicaid waiver services, federal highway capital project funds, and FEMA grants. A recent analysis estimates that federal cuts to Medicaid could impact the state’s budget by $100 million.
Political context and timing
Partisan gridlock in Congress has hindered agreement on a short-term continuing resolution or full-year appropriations. Lawmakers are currently on recess until September 29, leaving only two days to reach an agreement before the looming deadline. A budget deal will require at least 60 votes in the Senate, necessitating bipartisan support amidst ideological disagreements.
State fiscal exposure
Massachusetts is facing fiscal complexities, with the state’s $61 billion fiscal 2026 budget heavily reliant on federal funds, including approximately $15.6 billion from federal reimbursements and grants supporting programs like MassHealth. These federal funds are integral to multiple state programs and capital projects, and a lapse in federal authorization could create immediate cash-flow and program delivery challenges for the state.
Historical context and precedent
Historical precedent exists for shutdown contingency planning in Massachusetts, dating back to federal shutdowns in 2013, 2015, 2019, 2020, 2021, and most recently in 2024. Agencies have activated contingency plans in prior shutdowns to prioritize essential services, manage payroll issues, and seek state-level temporary solutions where possible.
Economic note
The real gross domestic product (GDP) for the U.S. increased at an annual rate of 3.8% in Q2 but does not alleviate fiscal tensions related to federal funding. State officials note that a strong near-term GDP reading does not remove the need to plan for disruptions in federal payments and reimbursements tied to state budgets and programs.
Next steps and what to watch
State departments are compiling responses to the September 23 memo and must submit them by the September 30 deadline. The State House hearing on September 30 will provide a public forum for further discussion of budget risks and contingency options. Officials will monitor congressional action closely; any agreement in Congress before the October 1 deadline would change the immediate risk profile for state-funded programs that rely on federal support.
Frequently Asked Questions
Q: What is the immediate trigger for the state’s planning?
A: Massachusetts state government officials are preparing for a possible federal government shutdown as the federal fiscal year ends on September 30.
Q: What memo did state finance officials issue and when?
A: A memo was issued by the Office of the Comptroller and the Executive Office of Administration and Finance on September 23, instructing departments to summarize concerns regarding payroll and resource protection.
Q: When are responses to the memo required?
A: Responses to the memo are due by Tuesday, September 30, by 5:00 pm.
Q: What does the memo highlight about congressional action?
A: The memo highlights that Congress has not passed any of the 12 full-year appropriations bills required to fund the federal government as of the October 1 deadline.
Q: What happens to federal agencies during a shutdown?
A: In case of a shutdown, federal agencies are instructed to cease all non-essential discretionary functions, although essential services, such as Social Security, will continue.
Q: What specific state budget figures are at issue?
A: Massachusetts is facing fiscal complexities, with the state’s $61 billion fiscal 2026 budget heavily reliant on federal funds, including approximately $15.6 billion from federal reimbursements and grants supporting programs like MassHealth.
Q: What are identified vulnerable funding areas?
A: Potential vulnerabilities in funding due to a shutdown include Medicaid waiver services, federal highway capital project funds, and FEMA grants.
Q: How large could Medicaid-related impacts be?
A: A recent analysis estimates that federal cuts to Medicaid could impact the state’s budget by $100 million.
Q: What is the national economic context mentioned?
A: The real gross domestic product (GDP) for the U.S. increased at an annual rate of 3.8% in Q2 but does not alleviate fiscal tensions related to federal funding.
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Quick reference table
| Item | Detail |
|---|---|
| City | Boston |
| Memo issued | September 23 |
| Memo recipients | State departments (Office of the Comptroller and Executive Office of Administration and Finance) |
| Responses due | Tuesday, September 30, by 5:00 pm |
| Federal deadline | October 1 |
| State fiscal 2026 budget | $61 billion |
| Federal reimbursements and grants | Approximately $15.6 billion |
| Estimated Medicaid impact from cuts | $100 million |
| Public hearing | State House on September 30 |
| U.S. Q2 real GDP | Increased at an annual rate of 3.8% |
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Additional Resources
- NBC Boston: Massachusetts Readying ‘What-If’ Plans Ahead of Possible Federal Government Shutdown
- MassLive: Mass Government Layoffs Coming if Shutdown Happens, White House Office Says
- The New York Times: Government Shutdown and the U.S. Economy
- Boston 25 News: White House Tells Agencies to Draft Mass Firing Plans Ahead of Potential Government Shutdown
- Wikipedia: Government Shutdown
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