This is a developing story.
The White House is ordering a halt to all federal grants, loans and other financial assistance — with exceptions for Social Security and Medicare benefits — for what appears to be a period of at least two weeks, potentially affecting trillions of dollars across a vast array of programs, according to published reports.
Medicaid portals accessed by states, nonprofit aid organizations and programs for early childhood education were among those stating Tuesday they’ve been cut off from funding, according to The New York Times. The Trump administration, in an attempt to clarify its order, issued a subsequent statement noting the freeze would not apply to certain individual benefits such as food stamps and Pell Grants — as well as Medicaid, despite states reporting they’ve been frozen out.
”Hours after the Trump administration announced a sweeping freeze on federal spending, the U.S. government on Tuesday found itself mired in confusion and chaos, as it looked to stave off potential interruptions to programs that promote food safety, combat crime, provide housing aid, produce medical research and respond to natural disasters,” the Washington Post reported at midday Tuesday.
“Few in Washington appeared to understand the scope and intention of a White House memo that initially directed agencies to ‘temporarily pause’ the disbursement of key funds, leaving thousands of government services — totaling billions of dollars and dedicated primarily to Americans’ health, safety and well-being — at risk of shutting down, at least temporarily,” the newspaper added.
A coalition of states is planning to file a lawsuit Tuesday to block the order, U.S. Senate Minority Leader Senator Chuck Schumer (D-N.Y.) said during a press conference. Among the states involved are New York, California, Illinois, New Jersey, Rhode Island and Massachusetts. He said the freeze is illegal under the Impoundment Control Act of 1974, a law President Donald Trump asserts is unconstitutional.
A two-page memo published Monday by the White House budget office directs agencies to “temporarily pause all activities related to obligation or disbursement of all Federal financial assistance, and other relevant agency activities that may be implicated by the executive orders, including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.”
The memo states that “In Fiscal Year 2024, of the nearly $10 trillion that the Federal Government spent, more than $3 trillion was Federal financial assistance, such as grants and loans.”
The order “does not include assistance provided directly to individuals,” according to the memo.
The halt takes effect at 1 p.m. Alaska Time on Tuesday and agencies are required to submit detailed lists of projects suspended under the order by Feb. 10. The New York Times on Monday night reported the freeze could apply to local governments, disaster relief aid, education and transportation funding, loans to small businesses, and other areas of funding.
U.S. Sen. Lisa Murkowski, an Alaska Republican who has challenged some of Trump’s actions since he started his second term last Monday, said Tuesday of the freeze “I’m working through, trying to understand what this all means.”
“Our phones have been ringing off the hook all morning, wondering what it means (and) how long it’s going to last,” she said. “Everything from a small hydrodam project down in the Angoon area to people concerned about everything from housing to water infrastructure projects.”
The full local, regional and statewide impact of the freeze is not immediately known since a multitude of municipal, tribal, nonprofit and other entities receive various federal grants and loans. The federal government also provided 37.3% of Alaska’s $16.3 billion state government budget during the past fiscal year, according to the Alaska Department of Revenue.
Juneau city leaders, when asked for a preliminary assessment of the memo Monday night, said it appears Juneau can weather a short-term disruption, but that might not be true for some other communities.
“It has a higher likelihood of being meaningful for smaller communities because two weeks of funding we can float, but smaller communities can’t necessarily float like we can,” Deputy City Manager Robert Barr said.
Juneau relies on federal funds for a variety of ongoing and one-time purposes, with the latter including proposed flood-prevention efforts set to be debated by the Juneau Assembly next week. City Manager Katie Koester said she doesn’t expect that particular assistance — which will likely be coming over a period of months and years — will be affected, but there are numerous other allocations to keep an eye on.
“We have millions and millions of dollars in great funding from everything from police to (Capital City Fire/Rescue) to public projects,” Koester said. However, she noted, “Most of our grants — I won’t say all of them — are reimbursable” — meaning the city can seek funds within a certain period after spending them “so it doesn’t affect us from a cash-flow perspective.”
However, Koester said if such federal funding remains uncertain further into the future there may need to be a reassessment of grants and loans the city expects to receive.
City leaders were told last Thursday by Katie Kachel, a lobbyist hired by the City and Borough of Juneau for federal issues, the Trump administration isn’t likely to drastically affect flood-prevention measures or many other areas of funding, but “green” projects such as infrastructure and other support for electric vehicles could be targeted.
The Central Council of the Tlingit and Haida Indian Tribes of Alaska “is currently reviewing the order to understand potential implications,” President Chalyee Éesh Richard Peterson said in a prepared statement Tuesday morning.
“Tribes are sovereign governments, not a special interest category,” he said. “Tribes and tribal programs are grounded in trust responsibilities and treaty obligations.”
“Programs serving tribes and Native people are based on constitutional, trust, and treaty obligations — representing intergovernmental relationships with tribal governments and their citizens.”
The Washington Post, in assessing the legality of the freeze, reported “the president is generally allowed under the law to defer spending for a period of time if certain conditions are met, according to budget experts. To comply, though, Trump must make clear which budget accounts are frozen, and the budget office’s order may not have given sufficient grounds under the law to pause the funding. Pausing it over policy disagreements is not legal, said Bobby Kogan, a federal budget expert at the left-leaning Center for American Progress and a former Biden administration official.”
Trump has taken numerous other drastic steps since beginning his second term last Monday including ordering federal health agencies to halt advisories and other federal communications, and putting a hold on nearly all foreign aid.
• Contact Mark Sabbatini at mark.sabbatini@juneauempire.com or (907) 957-2306.
