CA sues to block Trump's $3 Trillion spending freeze that could affect disaster aid and healthcare

CALIFORNIA – California Attorney General Rob Bonta, filed a lawsuit along with 22 other states to block implementation of a memo by the Office of Management and Budget (OMB) threatening to freeze up to $3 trillion in federal assistance funding effective at 2pm PT, January 28th.

Bonta says impacted programs include disaster-relief funding necessary for Los Angeles’ recovery from recent wildfires, as well as public health, education, public safety, and government programs.

According to the Associated Press (AP), U.S. District Judge Loren L. AliKhan blocked the funding freeze minutes before it was scheduled to take effect. The court will revisit the issue on Monday, February 3, 2025.

The California lawsuit said, at the time of its filing, that the portal for processing Medicaid Disbursement was inoperable across numerous states for hours.

It also said the system for drawing down Head Start and the Child Care Development Block Grant Fund were also down for some states.

Financial assistance may be paused indefinitely

The OMB Directive orders all federal departments and agencies to temporarily stop using or distributing funds for programs tied to recent executive orders.

This includes ‘financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.’

The memo said the temporary pause will provide the administration time to review agency programs and determine the best uses of the funding for those programs consistent with the law and the President’s priorities.

“These broad, but not well-defined, categories of financial assistance that may be affected by the OMB Directive will be paused indefinitely. There is no time period by which the pause must end,” said the lawsuit.

Disaster aid for California and North Carolina could be affected

According to the lawsuit, ‘there are a number of key funding streams that are most essential and where the OMB Directive’s impact is most alarming.’

The OMB Directive puts a pause on any FEMA grant money not yet disbursed, including support for California as it responds to the fires.

The state says the purported freeze will also disrupt recovery efforts in western North Carolina, delaying repairs to homes, businesses, roads, bridges, and other critical infrastructure.

In addition, the lawsuit says state health systems rely on federal grant programs in order to provide essential services to millions of residents — state Departments of Health alone receive billions in grant funding.

Although the memo purportedly does not apply to Medicaid reimbursements, Washington State is currently unable to access funds for these reimbursements.

Other programs that could be affected include law enforcement programs, the National School Lunch Program, special education grants and childcare grants.

OMB directive is unconstitutional

The attorneys general argue in the lawsuit that the OMB directive is unconstitutional, breaks administrative law, and is unfair.

They say OMB has no authority from Congress to pause all federal financial aid indefinitely, ignoring laws and contracts that govern these funds.

“The directive also violates the “separation of powers” between Congress and the Executive Branch because the Spending Clause of the U.S. Constitution gives the power of the purse exclusively to Congress,” said a statement in the state’s news release.

To read the full lawsuit visit https://oag.ca.gov/system/files/attachments/press-docs/New%20York%20et%20al.%20v.%20Trump%20et%20al.%20Compl.pdf