Traffic on 17th Street in downtown Denver is pictured on Feb. 28, 2024. (Chase Woodruff/Colorado Newsline)
An unprecedented move by President Donald Trump’s new administration to freeze massive amounts of federal funding beginning Tuesday afternoon could have profound and immediate consequences for Coloradans.
A two-page memo issued by the Office of Management and Budget on Monday announced the freeze, which appeared to apply to all federal financial assistance, including grants and loans. Acting OMB director Matthew Vaeth wrote that the freeze would allow the Trump administration to screen federal aid programs for efforts to “advance Marxist equity, transgenderism, and green new deal social engineering policies.”
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The move will abruptly shut off funding for a vast array of programs administered by state and local governments and nonprofits, including food stamps, Head Start grants, Section 8 housing assistance, homeless shelters, community health centers and much more. Public officials and leaders of community organizations across Colorado were left scrambling Tuesday to process the implications of the order, which — if upheld in court — would amount to a radical rewriting of constitutional precedent giving federal spending power to Congress.
“President Trump’s OMB directive is lawless and unconstitutional — and the freeze in federal funding that he is attempting will have dangerous impacts for millions of Americans,” U.S. Rep. Joe Neguse, a Lafayette Democrat, said in a statement Tuesday. “The order threatens funding for law enforcement grants, farmers, Head Start programs for children, and countless other services and programs that Coloradans rely upon.”
Colorado Attorney General Phil Weiser said Tuesday he will sue to stop the freeze.
“This action takes the power of the purse away from Congress, violates the separation of powers, and is already causing massive harm in Colorado, undermining delivery of healthcare, education, and public safety,” Weiser said. “As attorney general, I will continue to defend Coloradans and the Constitution.”
Colorado’s state government alone received more than $17 billion in federal grants and contracts in fiscal year 2024, according to a state transparency database. Roughly $11 billion of that total was made up of Medicaid payments to the state Department of Health Care Policy and Financing.
Of the remaining $6 billion, about $1.8 billion in grants and contracts went to the Department of Higher Education; $1 billion funded child welfare, behavioral health and other programs through the Department of Human Services; $578 million was awarded to a wide variety of programs within the Department of Public Health and Environment; $403 million went to the Department of Early Childhood; and $366 million funded wildfire and other emergency preparedness efforts under the Department of Public Safety.
Medicaid
A footnote to Trump’s OMB memo said it should not be “construed to impact Medicare or Social Security benefits” but did not mention Medicaid. The Washington Post reported that multiple states were experiencing problems with Medicaid payments on Tuesday.
Several Democrats in the Colorado General Assembly reported the state’s Medicaid payment system was down, according to the Denver Post. A state spokesperson didn’t immediately respond to a Newsline inquiry on the system’s status.
Community health centers
The Colorado Community Health Network, an organization representing 20 community health centers across the state, said Tuesday that the freeze would have the “immediate impact of preventing nearly $9 million in monthly payments that are used to cover payroll and other costs.” Federally qualified community health centers are typically located in underserved areas and serve patients regardless of their ability to pay.
“Colorado Community Health Network calls on the Trump Administration, including Acting Health and Human Services Secretary Dr. Dorothy Fink, and Congress to lift this freeze in funding immediately to ensure communities across America continue to have access to life-saving preventive and primary care services,” the organization wrote in a statement.
Homeless shelters
Shelters and other services serving unhoused Coloradans rely heavily on grants from the Department of Housing and Urban Development to operate.
Lisa Sweeney-Miran, the director of a homeless shelter in Boulder, said that news of the funding freeze is causing agencies to halt projects related to building supportive housing and evaluate what services they’ll have to cut to stay afloat.
“If this order stands as is, I think you can expect to see widespread shutdowns — some agencies will be able to last longer than others, but all of us rely heavily on tax dollars to house and help,” Sweeney-Miran said.
This is a developing story and will be updated.
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