The Trump administration will be looking into various Democrat-controlled states to assess the level of fraud and wasteful spending of federal dollars that is occurring.
The Office of Management and Budget (OMB) issued a memo instructing most federal agencies to report how much federal funding is sent to 14 Democratic states between fiscal years 2025 and 2026. The purpose is “to collect a detailed spending report on Federal funds provided to entities in a select list of States” so the federal government can “better understand the scope of funding in certain States and localities in order to facilitate efforts to reduce the improper and fraudulent use of those funds through administrative means or legislative proposals to Congress.”
The OMB emphasizes that this is “a data-gathering exercise only” and that “it does not involve withholding funds, and therefore does not violate any court order.”
The memo defines “federal funds” to include “all grants (including grants then provided as subcontracts or subgrants to other entities), cooperative agreements, loans, contracts (including subcontracts), and other monetary awards” allocated to state and local governments, colleges, and nonprofits in the targeted states.
From CNN:
The request signals a dramatic escalation of the Trump administration’s increasingly aggressive strategy to target federal funding in blue states – an unprecedented policy approach triggered during last year’s government shutdown that has rapidly accelerated in the wake of sweeping fraud allegations in Minnesota.
OMB Director Russel Vought has run point on the effort after spending President Donald Trump’s past year in office re-engineering tools used by the agency, known as the federal government’s “nerve center,” to exert new authority and power over the federal spending process.
The memo directs agencies to include in their spending reports all grants, loans, contracts, subcontracts and “other monetary awards” provided to 13 states and Washington, DC. All of the states voted for Democratic nominee and former Vice President Kamala Harris in the 2024 election and 12 of the 13 states have Democratic governors. A fourteenth Democratic-led state has since been included in the review, according to a person familiar with the matter.
🚨Trump budget office orders review of federal funding for 13 Democratic-controlled states and D.C.
— Tony Seruga (@TonySeruga) January 22, 2026
The Trump administration is looking to cut off resources for “sanctuary” jurisdictions that refuse to collaborate with immigration enforcement authorities. pic.twitter.com/C0mdMiv9rr
This comes as the Trump administration continues to pressure states and jurisdictions that limit cooperation with Immigration and Customs Enforcement (ICE). Trump announced earlier this month that, starting February 1, the federal government would stop making “any payments to sanctuary cities or states having sanctuary cities, because they do everything possible to protect criminals at the expense of American citizens.”
PRESIDENT TRUMP: “Starting February 1st, we're not making any payments to sanctuary cities or states having sanctuary cities because they do everything possible to protect criminals at the expense of American citizens and it breeds fraud and crime and all of the other problems… pic.twitter.com/FyMYGilLtp
— Fox News (@FoxNews) January 13, 2026
The administration froze more than $10 billion in childcare and social services funding to California, Colorado, Illinois, Minnesota, and New York over concerns about fraud. A federal judge later issued an injunction against this effort.