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EVENTS
2026 Advanced Trademark Law Seminar
JANUARY 29, 2026

EVENTS
OBBBA: State and Local Tax (SALT) Issues and Impacts – Analysis and Practical Guidance
JANUAR

Dynamic Thinking for an Interpersonal Edge

Annual Review of Patent Case Law (Winston-Salem)

Annual Review of Patent Case Law (Charlotte)

Ethics, Personal Well-Being, and Technology Seminar

federal government shutdown, FY2026 funding lapse, government funding crisis, Continuing Resolution failure, discretionary appropriations, federal agency shutdown, federal employee furlough, essential vs non-essential workers, reduction-in-force (RIF) OMB memo, permanent federal layoffs, executive branch operations, government contract halt, public sector workforce, private sector impact, government shutdown economic loss, congressional negotiations, House Continuing Resolution, Senate cloture vote, White House OMB policy, federal program suspension, national productivity loss, consumer spending reduction, government service disruption, infrastructure development delay

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As Fiscal Year 2026 begins on October 1, 2025, the federal government has shut down due to Congress’s failure to pass new funding legislation. The lapse in discretionary appropriations halts operations for many agencies and contracts, affecting both federal employees—who face furloughs or unpaid “essential” work—and private sector businesses reliant on government contracts and services. Essential services like military, air traffic, and law enforcement continue, but most administrative and routine executive branch functions are suspended. Notably, a new White House OMB directive instructs agencies to consider permanent reduction-in-force (RIF) actions for employees in unfunded programs, potentially leading to significant layoffs. The ongoing shutdown threatens billions in economic losses and widespread uncertainty for federal operations and sectors dependent on government spending. Negotiations in Congress continue, but until a Continuing Resolution or appropriations bill is passed, the shutdown’s impact will intensify for both public and private sectors.

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Federal Government Shutdown for Fiscal Year 2026

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Fiscal Year 2026 begins today, October 1st, 2025. The federal government has shut down because Congress has failed to pass legislation providing funding for FY2026.

Until now, the government has been funded by a Continuing Resolution (CR). This CR extended FY25 funding levels from March 15th, 2025, to September 30th, 2025.

Types of Funding

Many agencies rely on discretionary funding, which has to be provided each fiscal year. Without a new CR providing discretionary funding, these agencies cannot spend money on relevant programs. Additionally, many agencies, even those that do not rely on discretionary funding, contract out various services, including IT and HR, which rely on discretionary funding. This means that even if an agency is not directly impacted by the shutdown, portions of the agency could stop operations until funding resumes.

Programs that receive advance or permanent appropriations are not directly impacted.

Impacts on Federal Employees

Federal workers who are deemed &ldquo;essential&rdquo; will continue to work without pay. Non-essential workers will be &ldquo;furloughed,&rdquo; meaning they are unable to work and do not receive pay.&nbsp;

The norm is for Congress to meet and remain in session immediately after a shutdown until the government is funded, regardless of any prior congressional schedule. Congressional staff for member offices and committees are deemed &ldquo;essential,&rdquo; meaning they are working to resolve the shutdown.

In the Executive Branch, most federal workers are deemed &ldquo;non-excepted&rdquo; and are furloughed immediately. This leaves only senior leadership positions, political appointees, and those deemed essential &ldquo;to protect life, property, and national security&rdquo; to continue working as &ldquo;excepted&rdquo; employees. This results in agencies, departments, and the White House having only a skeleton staff in place. All Executive Branch administrative and routine work stops or slows down.

The military, air traffic, and law enforcement are services not directly impacted by the shutdown.

A unique development of note for this government shutdown is that the White House Office of Management and Budget (OMB) released a memo last week stating that during the shutdown, agencies are directed to consider reduction-in-force (RIF) opportunities for all employees in programs, projects, or activities that lose discretionary funding as of October 1 and are not consistent with the President&rsquo;s priorities. The memo also directs each agency to revise the RIFs once the shutdown ends to retain only the minimum number of employees needed to function. This policy could lead to significant permanent layoffs in the Executive Branch.

Private Sector

The private sector is likely to be impacted if the shutdown persists. Uncertainty may lead to a reduction in consumer spending and may negatively impact markets. Services that rely on the federal government, such as health care, certain manufacturing, infrastructure development, etc., are likely to be heavily affected if the shutdown continues. The estimated cost of the government shutdown is in the billions, with potentially substantial impacts to overall national productivity.

Where We Are Now&nbsp;
The House passed a CR that would keep the government funded until late November. To advance in the Senate, the CR required 60 votes to invoke cloture and proceed to a final vote. Yesterday, the Senate failed to invoke cloture, as only 55 Senators, including 3 Democrats, voted in favor of the CR.
The Senate will vote again today on the CR, however more Democrat votes are needed to pass the bill.&nbsp; Negotiations continue between the Republicans and Democrats in the Senate to find a resolution both parties can agree on.&nbsp;&nbsp;

Moving Forward
 The KTS Government Relations and Regulatory Team is tracking the progress of negotiations between the parties in Congress and the Trump Administration and will provide relevant updates.

Learn more about Kilpatrick's Government Regulatory practice.&nbsp;
&nbsp;
For more information, please contact:&nbsp;
John Loving, jloving@ktslaw.com
Stephen Anstey, sanstey@ktslaw.com
Keval Patel, kpatel@ktslaw.com
Ransom Fox, rmfox@ktslaw.com

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✅ Low Risk - https://ktslaw.com/en/insights/perspectives/2025/10/federal%20government%20shutdown%20fiscal%20year%202026

Requests	IP Address	Location	AS Autonomous System
18	216.58.212.136	United States	AS15169
13	20.85.154.146	Washington, Virginia, United States	AS8075MICROSOFT-CORP-MSN-AS-BLOCK
13	151.101.194.137	United States	AS54113FASTLY
13	16.182.69.80	United States	AS13335
13	104.18.86.42	United States	AS13335CLOUDFLARENET
13	172.66.171.172	United States	AS13335CLOUDFLARENET
83	6	-	-

Security Scan Report: ktslaw.com

Summary

AI Security Verdict

Safe Website

Safety Factors

Details

Screenshot

Page Load Overview

Language Analysis

Primary Language

Detection Details

Website Classification

Primary Category

All Detected Categories

Detected Features

Domain & IP Information

Detected Technologies12

Content Similarity HashesFor malware variant detection

TLSH (Trend Micro Locality Sensitive Hash)

ssdeep (Context Triggered Piecewise Hashing)

sdhash (Similarity Digest Hashing)

Image Hashes

Perceptual Hashes

Other Hashes

Scan History