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Finance staff brief committee on temporary federal grant pause, monitoring risks to Madison funding
Summary
City of Madison finance staff on Feb. 3 briefed the Finance Committee on federal memoranda and court actions that briefly sought to pause some federal grants and loans and outlined where the city may be exposed.
City of Madison finance staff briefed the Finance Committee on Feb. 3 about recent federal memoranda and court actions that briefly sought to pause federal grants and loans and the potential implications for city funding.
Dave, speaking for the finance department and mayor's office, summarized actions at the federal level: an OMB memorandum instructed agencies to pause certain grants and loans, effective Jan. 28 at 5 p.m. Eastern; courts temporarily blocked the pause; OMB issued a follow-up memorandum and another federal judge issued a temporary restraining order blocking suspension in 22 states, including Wisconsin. "So right now there is no pause, but we are monitoring closely what is happening," Dave said.
Finance staff said they are compiling an inventory of city programs and projects that rely on federal funds. Using the city's single-audit schedules as context, staff noted federal funding is significant for specific programs — for example, housing (Community Development Block Grants and Section 8 vouchers), transit (including recent East-West bus rapid transit funding) and public health programs (HHS, WIC). Dave said federal funding comprised about $50 million in recent years as a share of the city's all-funds budget of roughly $828 million (around 6%), but the share can be much larger within particular programs.
Staff highlighted capital budget exposure: roughly $56 million shown in the 2024 capital plan rising to about $185 million in 2025, largely because of bus-rapid-transit projects that anticipate federal dollars. Staff also flagged direct-pay tax credits under the Inflation Reduction Act, used for clean-energy projects. The city submitted required IRS paperwork Nov. 15, 2024, for 12 passenger vehicles (estimated $90,000) and nine solar projects ($415,000), but the city said the status of those claims is unknown and staff judge a high degree of risk that the funds might not be received.
Committee members discussed outreach to congressional delegations and legal monitoring. Alder Evers asked whether Madison could be specifically targeted; staff said last week's actions were broad and affected units of local government nationwide, and that vulnerabilities depend on future agency and congressional actions.
Next steps: finance and the mayor's office will continue to monitor legal developments, develop a citywide inventory of federal funding exposures, and report updates to the committee.
