H.R. 7507 — Fiscal Harms of Federal Firings Act

This section states five congressional findings on the impacts of federal reductions in force (RIFs), including worker displacement across states and localities, increased demand for state-administered services (e.g., unemployment insurance, Medicaid, workforce retraining, housing assistance), reduced economic activity and tax revenues in federal-employment-heavy regions, varying state and local fiscal capacities, and the lack of a comprehensive federal assessment of RIF effects on state and local budgets.

This section requires the Comptroller General of the United States to conduct a comprehensive study on the impacts of federal reductions in force (RIFs)—defined to include reductions under subchapter I of chapter 35 or section 3595 of title 5, U.S. Code, or any other significant downsizing of federal civilian employees—on state and local government budgets (with "state" defined to include the District of Columbia and U.S. territories and possessions). The study must examine, at a minimum: (1) changes in state or local expenditures on unemployment insurance, Medicaid and other health programs, workforce development and retraining, or housing and income assistance due to RIFs; (2) impacts on state and local tax revenues, including income, sales, and property taxes; (3) regional economic effects, including employment shifts and private-sector impacts; (4) administrative and operational challenges for states and localities; (5) differences in impacts based on RIF size, geographic concentration of federal employees, and state or local fiscal capacity and labor market conditions; (6) historical case studies of significant RIFs over the previous 20 years; and (7) state and local mitigation strategies. In conducting the study, the Comptroller General must consult state and local budget officers and governors' offices, workforce and labor agencies, relevant federal agencies (including the Office of Personnel Management and Department of Labor), and experts in economics, labor markets, and public finance; the study may use administrative data, surveys, economic modeling, and public statistics. Not later than 18 months after enactment, the Comptroller General must submit a report with study findings to the House Committee on Education and the Workforce, the Senate Committee on Health, Education, Labor, and Pensions, the House Committee on Oversight and Government Reform, and the Senate Committee on Homeland Security and Governmental Affairs. The report must include an analysis of whether studied RIFs improved agency efficiency, recommendations for statutory or administrative changes to support displaced employees and affected state and local governments, identification of most fiscally impacted state and local governments, projected short- and long-term budgetary impacts, and policy options such as federal assistance or coordination mechanisms; the report must be publicly available on the Government Accountability Office website.