City attorneys, finance staff brief committee on federal funding pause; courts have issued injunctions, staff outline grant risks

City Attorney Mike Haas and finance staff briefed the Finance Committee on Monday, March 20, on the status of federal executive orders and directives that have sought to pause federal grants and loans, the litigation responding to those orders, and potential budgetary impacts for the city.

Haas gave a legal update, saying federal courts have issued temporary restraining orders and at least one preliminary injunction that halted parts of the administration's actions. The court in the D.C. case described the freeze as “ill conceived from the beginning” and found a likelihood of success on the claim that the pause was arbitrary and capricious. Haas warned that court orders so far relieve immediate risk but do not guarantee that the administration could not use other legal authorities to restrict funding in the future.

Dave, the finance director, told the committee the city gathered agency data showing roughly $438 million in federal grant awards tied to 2025 activity; of that total, staff identified about $157 million in program funding flowing to roughly 16 city agencies and supporting approximately 75 full-time-equivalent positions. The grants support a broad set of services and capital work, including housing assistance, emergency rental assistance, homeless services, major road reconstruction and safety projects, bus rapid transit and electric-bus acquisitions, public-health programs, law-enforcement assistance and safe drinking-water work. Dave stressed that some awards have already been reimbursed to the city and therefore may not be at risk; he also cautioned that year-to-year comparisons reflect large COVID-era and other one-time infusions.

Tom Lynch, transportation staff, outlined risks to specific transportation grants. He said the Capital Investment Grant (CIG) for the North-South BRT, which the city has been recommended for but has not yet contracted, carries a high risk of being delayed or not funded in the next four years. By contrast, ongoing formula grants used for operations and bus maintenance (notably a grant the transcript identifies around $7.7 million) and several executed agreements (including a $25 million John Nolan Drive grant) have lower perceived risk because funds are already obligated or reimbursed. Lynch identified other programs with moderate-to-high risk (ATTAIN technology grant, carbon reduction dollars, certain discretionary competitive grants) and urged contingency planning.

Haas also summarized litigation around executive orders targeting diversity, equity and inclusion (DEI) requirements in grants. A federal court in Maryland issued a preliminary injunction halting a provision that would have required grantees and contractors to certify they do not operate DEI programs that violate applicable federal anti-discrimination law; the court found that provision unconstitutionally vague and a likely violation of the First and Fifth Amendments. Haas said that injunction applies broadly to nonparties receiving federal funding.

Staff told the committee they have given short-term guidance to agencies: submit reimbursement requests more frequently (for example, monthly instead of quarterly), monitor grant portals and report access issues to finance immediately, and review new notices of funding opportunities (NOFOs) for potential new grant terms tied to executive orders (for example, DEI certifications). In some cases the city has instructed subrecipients to stop work where funding access was paused; where portals reopened after litigation, staff have cautiously resumed reimbursement activity.

Committee members asked about the administration's priorities and which programs could be most at risk; staff said climate- and clean-energy-related programs (including elements of the bipartisan infrastructure law and the Inflation Reduction Act) are particularly vulnerable in the current congressional and administrative context. Members also asked about communications to nonprofit partners; staff said they have already sent stop-work letters in some instances and will continue to communicate as the situation evolves.

No formal committee action was taken on the update; the item was listed as a discussion and staff committed to continued monitoring and reporting to the council as developments unfold.