Attorney General James Leads Coalition in Suing to Stop Trump Administration from Withholding Essential Federal Funding

NEW YORK – New York Attorney General Letitia James today led a coalition of 22 other attorneys general suing to stop the implementation of a new Trump administration policy that orders the withholding of trillions of dollars in funding that every state in the country relies on to provide essential services to millions of Americans. The new policy, issued by the President’s Office of Management and Budget (OMB), puts an indefinite pause on the majority of federal assistance to states. The policy would immediately jeopardize state programs that provide critical health and childcare services to families in need, deliver support to public schools, combat hate crimes and violence against women, provide life-saving disaster relief to states, and more. Attorney General James and the coalition of attorneys general are seeking a court order to immediately stop the enforcement of the OMB policy and preserve essential funding. 

“Immediately blocking the majority of federal funds to states is unconstitutional and dangerous,” said Attorney General James. “Millions of Americans rely on federally funded programs every day to get the health care they need, support their families, and stay safe in their communities. Already, this policy has unleashed chaos and uncertainty, with law enforcement halting drug enforcement efforts, Medicaid portals shutting down, and other critical services being thrown into disarray. Today, I am leading a coalition of attorneys general to uphold the law and ensure that essential services in states across our country can continue.” 

The OMB policy, issued late on January 27, directs all federal agencies to indefinitely pause the majority of federal assistance funding and loans to states and other entities beginning at 5:00 pm today, January 28. As Attorney General James and the coalition note in their lawsuit, OMB’s policy has caused immediate chaos and uncertainty for millions of Americans who rely on state programs that receive these federal funds. Essential community health centers, addiction and mental health treatment programs, services for people with disabilities, and other critical health services are jeopardized by OMB’s policy. In New York alone, the state’s Department of Health is set to receive about $40 billion in federal funding in fiscal year 2025 thus far, with hundreds of millions of dollars dedicated to providing health care in rural and underserved areas of the state. 

Attorney General James and the coalition also argue that jeopardizing state funds will put Americans in danger by depriving law enforcement of much-needed resources. OMB’s policy would pause support for the U.S. Department of Justice's initiatives to combat hate crimes and violence against women, support community policing, and provide services to victims of crimes. In addition, Attorney General James and the coalition of attorneys general note that the OMB policy would halt essential disaster relief funds to places like California and North Carolina, where tens of thousands of residents are relying on FEMA grants to rebuild their lives after devastating wildfires and floods.

While the administration has attempted to clarify the scope and meaning of the OMB policy, states have already reported that funds have been frozen, jeopardizing services like Medicaid across the country. As part of their lawsuit, Attorney General James and the coalition of attorneys general argue that OMB’s policy violates the Constitution and the Administrative Procedure Act by imposing a government-wide stop to spending without any regard for the laws and regulations that govern each source of federal funding. The attorneys general argue that the president cannot decide to unilaterally override laws governing federal spending, and that OMB’s policy unconstitutionally overrides Congress’s power to decide how federal funds are spent. 

This lawsuit was led by Attorney General James and the attorneys general of California, Illinois, Massachusetts, New Jersey and Rhode Island. Joining the lawsuit are the attorneys general of Arizona, Colorado, Connecticut, Delaware, Hawaii, Maine, Maryland, Michigan, Minnesota, Nevada, New Mexico, North Carolina, Oregon, Vermont, Washington, Wisconsin, and the District of Columbia.