New Trump-led proposals to change how federal grants are decided could spell trouble for blue cities and states, The Indicator reports.
The Trump administration is proposing changes to the way federal grants are awarded. It wants to give political appointees the power to sign off or cut off federal funding. Here are The Indicator's Adrian Ma and Wailin Wong.
ADRIAN MA, BYLINE: The Office of Management and Budget released its proposal in May, and among the groups that read it with concern was the National League of Cities. It's this organization that lobbies on behalf of more than 19,000 cities, towns and villages in the U.S. Dante Moreno is a lobbyist there.
DANTE MORENO: The federal government would be able to terminate any federal grant moving forward, not because your community isn't doing a good job but because the federal agency doesn't want to fund it anymore.
WAILIN WONG, BYLINE: Dante says, imagine a city applies for and gets awarded a $500,000 grant for a construction project that will take four years to complete. The city breaks ground and starts building. Then two years in, the federal agency overseeing the grant says, we're canceling your grant because this project no longer lines up with administration priorities.
MORENO: Now you have a problem and blight because you have this project that you can't finish.
MA: Dante says it's important to look back at a recent example of how federal grants to local governments have played out. And perhaps there's no better example than the American Rescue Plan Act, or ARPA. President Biden signed it into law in 2021 during the thick of the COVID-19 pandemic.
WONG: The program distributed $350 billion to state and local governments. It was meant as a lifeline for communities that saw revenues fall off a cliff with the pandemic.
MA: Cities like Rochester, Minnesota. Kim Norton is the mayor there. It's home to the Mayo Clinic. And in normal times, it gets a lot of money from hotel taxes when visitors travel to the hospital. That revenue dried up when the pandemic hit.
KIM NORTON: So we had to figure out – how can we continue to provide the services that the city is expected to provide, particularly during this time?
WONG: Rochester got $17.4 million in ARPA funds. Kim says the city government decided its priorities were keeping everyone on the payroll during a lean time.
NORTON: We didn't have a great amount to spend. But I think we spent it wisely so that we did not have to raise property taxes during that year and not lay off any staff.
WONG: Usually, with federal grants, they have specific targets, like roads or public safety. In contrast, ARPA recipients had a lot of leeway in how to spend their money.
MA: Now, some uses of ARPA funds have gotten pushback from community organizations and advocacy groups. A county in Upstate New York spent around $7 million on an aquarium. And critics said that the money could have been better spent tackling poverty, mental health or affordable housing.
WONG: Overall, though, the National League of Cities considers ARPA to be a positive program for local governments. Still, the OMB's proposal envisions a federal grant-making system that will look quite different than ARPA.
