The Trump administration's Office of Management and Budget (OMB) announced it had rescinded a controversial freeze on federal funding, which could have affected various sectors including nonprofits, small businesses, manufacturers, universities, healthcare, and transportation. This decision came after lawsuits were filed by nonprofits, small business advocacy organizations, and nearly half the nation's attorneys general.
Despite this announcement from the OMB, White House Press Secretary Karoline Leavitt later tweeted that "This is NOT a rescission of the federal funding freeze." The OMB's directive initially aimed to ensure alignment with President Donald Trump's executive orders that ended Diversity Equity & Inclusion programs and impacted policies on clean energy, immigration, climate change, health and medical research.
A federal judge in Washington D.C. intervened minutes before the freeze was set to take effect on January 28th. Judge Loren L. AliKhan ordered the administration not to block any "open awards" until at least February 3rd. A hearing has been scheduled for that date in response to a lawsuit filed by groups including the National Council of Nonprofits and Main Street Alliance.
In parallel legal action, attorneys general from 22 states filed a lawsuit against the spending freeze in U.S. District Court in Rhode Island. They argued that the OMB directive created "chaos and confusion" regarding state funding disbursements.
Judge John McConnell agreed with these attorneys general that despite OMB's rescission of its directive earlier that day, there was still concern about potential elimination of federal funding due to ongoing policy intentions by the administration.
NJBIA Chief Government Affairs Officer Christopher Emigholz expressed concerns over how such a freeze could impact New Jersey programs reliant on federal grants for workforce development training and other initiatives. He emphasized that while finding government efficiencies is important, many federal investments are crucial for state economies.
Peter Connolly from New Jersey Manufacturing Program highlighted uncertainty faced by grant recipients following OMB's initial announcement on January 27th.
