Peoria officials warn $32.9 million in federal funds at risk after temporary federal spending freeze

City officials told the Peoria City Council on Tuesday that roughly $32.9 million in federal grant funds the city has received or is scheduled to receive could be at risk if a federal spending freeze requested by the Trump administration remains in effect.

The exposure includes a little more than $15.1 million in direct federal awards the city has received and about $17.8 million in federal pass-through dollars the state then awards to the city, Director Craddy, finance director for the city of Peoria, told the council. "In totality, we're looking at about $32,900,000 in funds that are at risk," Director Craddy said.

Why it matters: Council members were told that a sudden pause would force the city to temporarily use general-fund reserves to cover expenses that had been planned for reimbursement, accelerating the drawdown of the city's fund balance and potentially affecting ongoing projects and personnel funded by grants.

City Manager (name not specified) summarized the federal action and the immediate status: "There was a judge that came in and basically put a hold on that until February 3," he said, referring to a court stay that staff said temporarily prevented the freeze from taking effect. The manager and Director Craddy urged staff to seek immediate reimbursements where possible and to document any technical or administrative issues encountered when drawing down funds.

Director Craddy walked the council through the grant categories the city reviewed. He said the $15.1 million figure represents the remaining balances on federal awards already received by the city; staff additionally called out roughly $3 million in anticipated Community Development Block Grant (CDBG), HOME and Emergency Solutions Grant (ESG) awards that had not yet been made and therefore were not included in the $15.1 million total. The city also flagged the Illinois Environmental Protection Agency low-interest loan program used for combined-sewer overflow work as partially federally funded and noted that its federal/state split fluctuates.

Council members pressed for specifics on how quickly the city could pull reimbursable costs. Mayor Ali asked whether monies already spent but not yet invoiced could be drawn down before the stay; Director Craddy said staff had already submitted at least one $25,000 drawdown request that was accepted within hours of the stay and that staff were reviewing invoices and contracts to identify additional opportunities to request reimbursements.

Council member Allen asked whether American Rescue Plan Act (ARPA) funds were affected; Director Craddy said they were not: "ARPA was handled different than these grants. ARPA... we receive the funds," he said, and therefore those dollars remained available.

Council member Cyr asked how large the exposure represented the city's annual budget. Director Craddy said the $32.9 million would be roughly 15% of the city's budget. When asked whether general-fund reserves could be reallocated if federal reimbursements did not arrive, Director Craddy said the council has the prerogative to use reserve dollars but that doing so would affect multiyear plans already in place, including pension funding strategies.

Staff directions and next steps discussed at the meeting included: staff continuing to monitor the legal status of the freeze and the judge's stay, completing contract- and invoice-level reviews to identify reimbursable expenditures, documenting any technical issues for federal and state lawmakers, and sending an electronic version of the grant-exposure report to council members. Council members also requested that the city keep corporation counsel informed as staff determine whether short-term general-fund substitutions would be necessary for grant-funded personnel or programs.

The discussion named specific programs the council said could be affected if funds were lost, including the FEMA/SAFER firefighter grant the city uses to staff 14 firefighters; Director Craddy said obligations tied to such grants could require use of general-fund dollars if federal reimbursements were not reinstated.

The council did not take formal action other than to accept the staff briefing and direct further monitoring and reporting. Staff emphasized that the numbers presented were preliminary and that a deeper, contract-level review would be required to determine the city's final exposure.

Ending note: Director Craddy told the council staff would continue to update them as the legal and administrative situation developed and as staff completed a more detailed review of invoices, contracts and unclaimed drawdowns.