With federal disaster aid denials reaching their highest level in the last 45 years, municipal investors are concerned about further retrenchment of federal support in 2026.

There is a general sense of retrenchment from the federal government, said Jeffrey Devine, vice president and director of municipal research at GW&K Investment Management. “It’s certainly an issue that’s not really going to go away any time soon.”

Through 2025, President Donald Trump’s (R) administration rejected 26 emergency and major disaster declaration requests, according to an analysis of Federal Emergency Management Agency (FEMA) data by Debtwire Municipals (Figure 1). The last time the federal government denied this many climate-related requests was under President Jimmy Carter (D) in 1980.