One Big Beautiful Bill: Ugly Costs for State and Local Governments

Policy changes in Washington are transferring greater responsibility for funding certain federal programs to state and local governments. The recently enacted tax and spending law known as the One Big Beautiful Bill Act (OBBBA), along with several separate policy proposals, aims to reduce federal expenditures by tightening program requirements and realigning costs. Many provisions of the OBBBA will be phased in over multiple years, while the fate of other proposals remains uncertain. KBRA expects these changes to pose challenges for many issuers across the municipal market. Individual issuers will need to plan proactively and make potentially difficult budgetary choices to absorb additional costs. In the months ahead, KBRA will closely monitor the federal budget and appropriations process, including any rescissions of funding authorizations, as the timeline grows shorter to enact a budget for the fiscal year beginning October 1.

Key Takeaways