Several months into 2026 and one thing is certain – uncertainty and unpredictability from DC. We saw it in 2025 and already we are seeing more of the same.
One of the ongoing questions for the municipal market is "what are the impacts of funding uncertainty and how can market participants best arm themselves to manage the day-to-day operations of a municipality, school district, project, etc.?" Public finance professionals need to contemplate this uncertainty as they work with municipal issuers to help them plan and meet their needs.
Recent Unanticipated Federal Actions Impacting Municipal Finance
Politics aside, here is but a sampling of unanticipated actions that impacted municipal finance in 2025 and into this year:
• Federal government shutdown (2025) and its impact
• Social service funds frozen over fraud concerns
• California HSR grants terminated • DHS blocking $34mm for NYC MTA
• Public safety grants terminated impacting local governments
• HUD programs threatened
• FEMA disaster mitigation and response funding cut
• Freezes in job training, mental health and other services.
Think of the impact of these unanticipated actions on the budgets of those affected. What next?
Why Real-Time Cash Management Matters
Municipal entity reliance on federal funds cannot be minimized –just look at their budgets. In a time of continued uncertainty, Municipal issuers need to be prepared to effectively and efficiently manage cash, debt, and budgets, while ensuring meaningful and timely disclosure for their citizens and investors.
Issuers and the Public Finance professionals serving as their trusted advisors need a purpose-built cash management solution. Real-time management of cash flows against budget is key to budget and capital plan execution. Has revenue materialized as budgeted (funding from the federal government, tax receipts, etc.)? Have expenses occurred as planned, or did funding not arrive and the municipal entity is left holding the bag (e.g., a project underway or FEMA aid not materializing)?
A cash management tool that tracks actual bank activity and helps build a robust cash flow analysis and forecast will help the issuer in planning, determining forecast to actual variance and, as needed, reacting in real-time to best manage their "business." It will also support the critical task of having real-time information to help communicate with constituents: How does the federal government's not funding X impact our municipality? How will damage from the storm be addressed with no FEMA aid? Will this impact my taxes or the plan to build a new school?
The Critical Link Between Cash and Debt Management
Intimately related to cash management (budget and capital plan execution) is debt management. For the issuer and their trusted advisors – Municipal Advisors, Bankers and others – debt management captures what's outstanding for what purpose and payments due as well as new issue planning. While the budget may have called for a new issue of $100mm or federal grants being received for a project underway, DC uncertainty has changed the equation.
Issuers and their trusted advisers must be able to efficiently and effectively assess all factors of active liquidity management – outstanding debt, debt service, principle due, and cash (actual v. budget) to best refine the size, timing, and structure of new issues. Tools geared to the municipal market nuances are key to defining and refining the best solutions for budget and capital execution.
Moving Beyond Spreadsheets and Disconnected Tools
Some rely on excel spreadsheets, others on the square peg in a round hole (tools designed for another market or purpose) and still others on a third party managing these critical tasks.
It is time for municipal issuers to access built for purpose tools that provide relevant functionality geared towards our Municipal market – a comprehensive Treasury Management platform that meets the highly unique needs of municipalities and issuers and those that serve them. These tools – integrating debt, cash and investment management – should be part of a broader offering by a single enterprise, avoiding piecemeal "solutions" that warrant multiple applications and interfaces.
Gregg L. Bienstock leads Bienstock Consulting and is a Strategic Advisor to DebtBook, a leading provider of cloud-based treasury and accounting software purpose-built for government and nonprofit finance teams.
