House kicks off 2027 appropriations, slashes IRS funding

House subcommittees on Friday kicked off fiscal year 2027 appropriations with a financial services budget that features deep cuts to the Internal Revenue Service.

Separately, House Transportation & Infrastructure Chair Rep. Sam Graves, R-Mo., said his committee would mark up the long-awaited draft of a surface transportation bill on April 29. Graves said the bill would likely total between $500 billion to $550 billion and include an electric vehicle registration fee, according to Politico.

"I'm gonna say it's gonna be somewhere in the neighborhood of $550 billion or $500 billion ? somewhere in there. That will be our number. We're still actually ? believe it or not ? negotiating that," Graves told Politico on Thursday. The current law, the Infrastructure Investment and Jobs Act, which expires on Sept. 30, totaled $1.2 trillion, although half of that did not go directly to traditional transportation projects. The proposed EV fee is an effort to shore up the ailing Highway Trust Fund.

The 2027 appropriations process comes two weeks after President Trump unveiled his spending proposal..

The House financial services appropriations subcommittee Friday morning approved, along a party-line 9-6 vote, a draft 2027 Financial Services and General Government budget that the full appropriations committee is set to markup next week.

The budget would cut Department of Treasury funding by 8.3% below the fiscal 2026 enacted level, according to the Republican summary. That includes $10.2 billion for the IRS, which is $953 million less than the fiscal 2026 level, according to the Democratic summary. Municipal bond market participants have said reduced IRS funding tends to lead to fewer municipal bond audits.

"This year, the bill prioritizes the elimination of waste, fraud, abuse, and other improper payments in both the federal and state governments," said subcommittee Chairman David Joyce, R-Ohio. "These are priorities on which all members on both sides of the aisle should agree and support."

Democrats Friday morning complained that the markup comes before they had a chance to hold hearings with department heads.

"The IRS delivers 96% of the revenue for the federal government; yet, this bill cuts it by nearly a billion dollars," Financial Services Appropriations Subcommittee Ranking Member Steny Hoyer, D-Md. said in a statement before the hearing. "It's not surprising that this bill is so flawed, given the shrouded process by which Republicans are bringing it forward, with few hearings or opportunities to question administration officials and a shortened timeline for consideration."

During the hearing, Hoyer introduced an amendment that would send an additional $1.8 billion to the agency's enforcement arm. Republicans defeated the move.

The Securities and Exchange Commission would receive $2 billion, a $123 million cut from fiscal 2026 under the draft budget.

The bill funds the Washington, D.C. government at $792 million for the District of Columbia, which is $86 million, or 9.8%, below the fiscal 2026 enacted level. That includes $10 million for the D.C. Water and Sewer Authority, which is $2 million above fiscal year 2026 and $10 million above the request, to fund infrastructure improvements, according to the Democratic summary.

The D.C. budget allocates $26 million for the D.C. Opportunity Scholarship Program, the first federally funded school voucher program in the United States.

Also on Friday, the House Military Construction-Veterans Affairs Appropriations Subcommittee approved a $157 billion fiscal 2027 spending bill, sending it to the full committee, which is expected to take it up next week. The budget is $4 billion, or 3%, higher than the enacted 2026 level.