Agencies Prepare for Partial Shutdown as Lawmakers Move to Minimize Impact

Lead

Federal agencies are preparing to implement partial shutdown procedures ahead of a potential funding lapse at midnight Friday, even as the Senate advanced a spending package that lawmakers say would likely restore funding by Monday. The Office of Management and Budget told Federal News Network it has issued guidance this week and will instruct affected agencies to begin shutdown steps once funding expires. The Senate on Friday approved a compromise package and a two-week continuing resolution for the Department of Homeland Security alongside five full-year spending bills; the measure now goes to the House, which is not scheduled to return until Monday.

Key Takeaways

• Agencies were told to ready shutdown plans this week; OMB warned it will direct agencies to begin procedures if funding lapses at Friday midnight.
• The Senate passed a spending package Friday and a two-week DHS continuing resolution; five appropriations bills cleared the chamber covering large swaths of government.
• The package now shifts to the House, which is set to reconvene Monday; Speaker Mike Johnson said he may face “tough decisions” about calling members back this weekend.
• The IRS announced employees will be “exempt from furlough” through Saturday, Feb. 7, if the lapse extends into next week and said it will operate using funds from the Inflation Reduction Act provided in August 2022.
• The DHS stopgap buys time for lawmakers to negotiate restrictions on immigration enforcement after two recent fatal shootings of protestors, including Alex Pretti on Jan. 24 and Renee Good two weeks earlier.
• The spending package includes $20 million for body-worn cameras and $2 million to expand training on de-escalation for DHS personnel, and grants broader inspector general review authority for detention centers.

Background

Short-term funding lapses — commonly called government shutdowns — occur when Congress does not pass appropriations or a continuing resolution by fiscal deadlines. Agencies typically maintain continuity plans that identify activities that must continue, personnel who are exempt from furlough, and services that will be paused. The Office of Management and Budget coordinates those plans and issues agency guidance when a lapse is possible, a routine step in years with tight appropriations calendars.

This episode unfolded after negotiators reached a narrow compromise addressing Department of Homeland Security funding, reportedly brokered between President Donald Trump and congressional Democrats. The agreement sought to reconcile Democrats’ demands for constraints on recent immigration enforcement tactics with Republican priorities on border security. The package’s mix of a short DHS CR and several full-year bills reflects a common congressional approach: protect the largest agencies from immediate disruption while buying time to resolve contentious policy matters.

Main Event

OMB officials told Federal News Network this week that guidance on a possible funding lapse has been “ongoing,” and that the agency would instruct impacted entities to commence shutdown procedures if appropriations run out Friday at midnight. That notice prompted agencies to finalize lists of exempt staff and to rehearse administrative steps needed to suspend nonessential operations. Many agency leaders have long-running contingency plans; this set of instructions is a reiteration but signals an imminent cutoff if lawmakers do not act.

On Friday the Senate approved a package that included a two-week continuing resolution for DHS and five spending bills that would fund major departments — including Defense, Labor, HHS, Education, Transportation and HUD — for the remainder of the fiscal year. Proponents framed the move as minimizing disruption while leaving time to negotiate policy changes tied to DHS funding. The measure now awaits action in the House, which returns Monday, creating a narrow window in which a lapse could occur and be quickly resolved.

Speaker Mike Johnson told the Associated Press he faces “tough decisions” about whether to bring the House back over the weekend to vote on the Senate-approved measure, leaving open the possibility of a brief weekend shutdown. Administration and congressional leaders have emphasized that a short gap would produce limited operational impact; nonetheless, agencies are treating the prospect seriously and finalizing technical steps to pause certain activities if required.

The Internal Revenue Service communicated to staff Friday that, if a lapse extends into next week, all employees would be exempt from furlough through Saturday, Feb. 7, allowing the agency to proceed with the tax filing season it began last week. The IRS cited Inflation Reduction Act funds it received in August 2022 to support operations, workforce rebuilding and IT modernization as the source enabling near-term normal operations despite a funding gap.

Analysis & Implications

Operationally, a short weekend shutdown would have limited visible effects on most agency services, especially those deemed essential or funded through prior multi-year appropriations. Critical functions such as active law enforcement, emergency response and certain health services typically continue; nonessential administrative tasks are the ones most likely to be suspended. Agencies’ advance planning reduces confusion and helps protect services with public safety or legal deadlines.

The IRS exemption through Feb. 7 and the use of Inflation Reduction Act funds reduce near-term risk to taxpayers and ongoing filing operations. That funding, dedicated to modernizing systems and rehiring after prior staff reductions, allows the IRS to keep processing and assistance functions running through a short lapse. Nonetheless, a longer shutdown could strain seasonal operations and contractor-supported IT work that rely on annual appropriations.

Politically, the two-week DHS CR is a tactical pause: it buys negotiators time to debate proposed guardrails on immigration enforcement without immediately cutting operations. Democrats pressed for limits after two recent protester deaths, and the package’s modest funding for body cameras and de-escalation training signals congressional intent to respond. Whether these measures become law depends on continued negotiations and whether both parties accept the final language.

For agencies and the public, the episode underscores how appropriations fights are increasingly tied to policy disputes. Lawmakers can use short-term funding to create leverage on specific issues — in this case, immigration enforcement practices — while avoiding broad government-wide disruption. The coming days will show whether that approach produces a stable resolution or a protracted standoff with deeper operational consequences.

Comparison & Data

The table summarizes the Senate action: a short-term CR for DHS to prevent an immediate funding cutoff while approving full-year measures for major agencies. The targeted DHS allocations are relatively small in overall budget terms but are intended as focused policy responses to recent operational concerns and incidents involving enforcement personnel.

Reactions & Quotes

“We always prep agencies for a potential lapse, and we start that process early,”

OMB spokesperson (statement to Federal News Network)

OMB framed the guidance as routine contingency work to protect continuity. Officials emphasized that preparing now reduces administrative confusion if the lapse occurs and helps ensure essential functions remain in place.

“Employees should report to work on their regular schedules,”

IRS chief human capital officer (agency memo)

The IRS memo clarified that staff would be exempt from furlough through Feb. 7 if a shutdown extends into next week and cited Inflation Reduction Act funding as enabling near-term operations.

“No one thinks we’re going to solve every problem in one fell swoop…the American people are demanding that something gets done,”

Senate Minority Leader Chuck Schumer (D-N.Y.)

Senate Democrats framed the DHS measures as the start of legislative steps to impose guardrails on immigration enforcement, highlighting public demand for accountability after recent deaths associated with enforcement encounters.

Unconfirmed

• Whether the House will reconvene over the weekend remains undecided and could change; Speaker Johnson indicated a difficult call but gave no firm timetable.
• It is not yet confirmed that the Senate-approved package will clear the House or be signed into law by Monday; additional amendments or objections could alter the timeline.
• The final scope and enforceability of proposed DHS guardrails — including body cameras, de-escalation requirements, and restrictions on home entries — remain subject to negotiation and legal review.

Bottom Line

Federal agencies are executing standard contingency procedures ahead of a potential funding lapse at midnight Friday while congressional leaders push a stopgap and targeted spending measures intended to limit disruption. The Senate’s action reduced the risk of a prolonged shutdown by advancing a two-week DHS CR and five full-year bills, but the measure must still clear the House to avert or end any lapse.

Operational impacts are likely to be limited if the funding gap is short, with key services and law enforcement remaining active and the IRS able to use designated Inflation Reduction Act funds to sustain tax-season work at least through Feb. 7. The broader policy fight over DHS enforcement practices, motivated by two recent fatal shootings of protesters, means the political negotiation could extend beyond the immediate funding timeline and shape enforcement oversight in the months ahead.

Sources

• Federal News Network — news report including OMB and IRS statements (original reporting)