What’s at stake in a government shutdown: Vermont jobs and millions of dollars

Thousands of Vermont’s federal workers are at risk of getting furloughed or fired under the government shutdown which began on October 1st. Even with a continuing resolution in place, hundreds of millions of dollars in grant funding to Vermont could be at risk and lead to programmatic funding cuts, particularly in high-inflation sectors.

Congressional leaders failed to reach an agreement on a funding bill. As a result, federal discretionary funding expired on September 30th, 2025 at midnight, the end of the 2025 federal fiscal year (FFY). While discretionary funding accounts for only about a quarter of all government spending, nearly half of this amount is allocated toward employee benefits and pay, making it a significant funding source for federal workers. Until Congress takes action, many federal programs won’t be able to operate, many essential federal employees will be working without pay, and federal employees considered non-essential will not be able to work. Employees typically receive back pay when the shutdown ends, but the administration has suggested some furloughs will become permanent this time.

Each federal agency releases shutdown plans that include the number of staff it deems essential. This is not binding, but it can provide insight into the administration’s thinking. For example, the Department of Homeland Security, which includes immigration services and enforcement workers, released a plan that names nearly 92 percent of its staff as essential.

As of March 2025, Vermont has roughly 6,600 federal workers. Considering past precedent and agency shutdown proposals, many of these workers may be deemed essential because they work for the military or immigration enforcement.  Vermont’s largest federal employer is Citizenship and Immigration Services, with Customs and Border Protection (CBP), Immigration and Customs Enforcement (ICE), and Army and Air National Guards also accounting for hundreds of Vermont jobs.

However, there are still thousands of workers in the state who may be put on leave during the shutdown because their work falls outside of these “essential” categories. This includes those doing environmental work, small businesses, farmers, and more.

In addition to the risk of being put on leave, the Office of Management and Budget (OMB) has proposed mass federal layoffs during the shutdown. OMB has stated that these cuts will not apply to Social Security, Medicare, veterans’ benefits, military operations, law enforcement, ICE, CBP, and air traffic control. Again, while many of Vermont’s federal workers fall into these categories of exempt workers, thousands are at risk of getting laid off, including postal workers. While these workers are not typically impacted by shutdowns because the postal service is an independently funded agency, this administration made it clear in the spring they intend to cut postal jobs.

Congress is expected to pass a continuing resolution (CR) to end the shutdown, which would extend FFY 2025’s funding levels into some or all of the next fiscal year. A CR generally avoids sweeping funding cuts, but could still harm Vermont in several ways.

In a typical appropriations bill, legislators include explanatory statements that specify how funds should be spent. These statements can guide agencies on how to allocate funds, including directing them to certain programs, geographic areas, or Congressionally-identified priorities. Without explanatory statements, federal agencies have more discretion over how funds—$1.6 trillion in FFY 2025—are used, giving the administration more authority to direct funds to or away from Vermont.

Explanatory statements can also direct funds toward specific projects (known as “earmarks”), such as building an affordable housing development in the Northeast Kingdom. Through earmarks, Vermont projects received over half a billion dollars in FFY 2022, 2023, and 2024 combined for housing, transportation, rural development, agriculture, and other areas. Since CRs usually do not include explanatory statements, Vermont’s earmark funding could be at risk.

Additionally, a CR typically does not account for inflation, which has increased by roughly 3 percent since the beginning of FFY 2025. In other words, level funding equates to a three percent cut, with sectors experiencing higher-than-average rates of inflation, like housing, healthcare, food, and education, experiencing larger gaps.

The federal shutdown and lack of a budget put thousands of Vermont jobs and millions of dollars in federal funding at risk, during a time when Vermonters are already experiencing federal funding cuts and increased economic uncertainty. While continuing resolutions are not unusual and shutdowns not unprecedented, this budget fight is part of a larger push by this administration to cut federal workers and shrink government, and comes on top of previously-enacted cuts to food stamps and Medicaid. Against that backdrop, this shutdown could result in more lasting harm than in the past.