At a glance
- The proposed OMB rule could expose roughly $6 billion in federal funding to Maine to new political conditions, including $900 million in competitive grants and $5.1 billion in formula-based funding
- The rule would let political appointees reshape or withhold grants based on presidential priorities, raising the risk that funds for health care, roads, education, heating assistance, and other services could be used as leverage for unrelated policy goals
- OMB must still review public comments before finalizing the rule, and Congress can act to block it.
The White House Office of Management and Budget (OMB) is considering a change to federal rules which would give political appointees unprecedented control over federal grants, allowing them to add new conditions and even terminate grants based on the president’s priorities, rather than Congressionally approved purposes of the grants. The rule is so broadly written that it could lead to political interference in grant programs worth $6 billion in Maine in 2025, and make federal support for everything from roads to health care contingent on state agreement to totally unrelated policy goals.
The proposed OMB rule, which aims to be finalized before October 1, consists of two major changes:
- Competitive, merit-based grants would be subject to review by political appointees, rather than the subject-matter experts who currently decide what to fund. The new rule would disqualify applicants if they don’t “advance the President’s policy priorities,” a designation that can include vague offences such as choosing to “promote anti-American values.” In federal fiscal year 2025, Maine-based organizations received just under $900 million in these kinds of competitive awards, supporting projects such as infrastructure construction, Head Start, medical research, and forestry.
- The bulk of federal funding in Maine is awarded on a formula basis — Congress determines how much each state should receive based on measures like need and population size. But the proposed OMB rule would allow administration officials to override Congress’ aims by adding new conditions to grants after the fact, and even withhold funding if they didn’t meet these conditions. The proposed rule could also be used to penalize or harass grant recipients disfavored by the president or his appointees based on unjustified concerns that such grantees pose reputational risk to the federal government. In federal fiscal year 2025, Maine received $5.1 billion in these kinds of grants. The majority of this is federal funding for the MaineCare program, while smaller amounts go to highway construction, education, heating assistance, and ensuring safe drinking water.
The Trump administration has already shown its willingness to weaponize federal grantmaking to coerce states into making unrelated policy changes:
- Last year, Trump officials tried to withhold school lunch funding over a state law allowing transgender students to compete in school sports. A state lawsuit forced the administration to release the funds.
- Until recently, President Trump’s health and human services officials were proposing withholding Medicaid and Medicare funding for hospitals that provided some kinds of gender-affirming care.
- Following a court decision that said the federal government cannot compel states to hand over voter data, the administration has threatened to withhold election security funding to states unless they share potentially sensitive information.
Nationally, federal officials also singled out states for not assisting in the president’s mass deportation agenda and tried to use federal funding as leverage. While the courts blocked many of these attempts, the new OMB rule would make it easier for the Trump administration to weaponize this money.
And while the state is by far the largest recipient of federal funds, the new rule could affect some large private employers in Maine as well. In federal fiscal year 2025, Jackson Labs received $40 million in federal grants, Maine Veterans Homes received $33 million, MaineHealth received $24 million (in addition to the federal share of Medicaid funding for patient treatment), and the University of New England received $9 million. Each of these entities would be newly exposed to political pressure and the threat of retaliation under the proposed OMB rule.
There are still opportunities to avoid the harm that could come from this sweeping rule. OMB must review and respond to tens of thousands of comments submitted by members of the public before finalizing its rule in October. Congress also can override the agency and prevent the implementation of the rule entirely. The US Senate has included a provision in its stopgap funding bill that would block the OMB rule from taking effect through December but the House has yet to vote on this bill. Congress must act to block the proposal permanently