The shutdown of the U.S. federal government is now in its fourth week, with no end in sight. Since 1980, there have been 11 federal government shutdowns that furloughed employees, the longest of which lasted 34 days. While shutdowns are characterized by the cessation of certain revenue streams and payments to state and local governments, hospitals, and higher education institutions, the current shutdown has also resulted in freezes of previously awarded funds for high-profile capital projects.
In the past, most capital freezes applied to new obligations rather than the withdrawal of funds already awarded for projects underway. In contrast, the current cessation of capital project funding reflects executive-branch policy decisions to withhold previously obligated funds rather than a statutory lapse in appropriations. In KBRA’s view, this represents a paradigm shift from automatic work stoppages to discretionary funding actions, with significant implications for public finance and…