Attorney General Nessel Joins 22 States in Suing to Stop Trump Administration from Withholding Essential Federal Funding

LANSING – Michigan Attorney General Dana Nessel today joined a coalition of 22 attorneys general suing to stop the implementation of a new Trump administration policy that appears to order the withholding of trillions of dollars in funding that every state in the country relies on to provide essential services to millions of Americans. The new policy, issued by the President’s Office of Management and Budget (OMB), puts an indefinite pause on the majority of federal assistance to states. The policy would immediately jeopardize state programs that provide critical health and childcare services to families in need, deliver support to public schools, combat hate crimes and violence against women, provide life-saving disaster relief to states, and more. Attorney General Nessel and the coalition of attorneys general are seeking a court order to immediately stop the enforcement of the OMB policy and preserve essential funding.  

The Attorney General released a video accompanying this announcement.  

“Freezing these critical federal funds will harm millions of Michigan residents who rely on these essential, congressionally funded programs,” Nessel said. “While we are continuing to seek clarity on the totality of what is impacted, we know that if a full freeze goes into effect, Michigan families will suffer, children will go hungry, communities will lose safety protections, and schools will struggle. Such a freeze will disrupt countless programs that Michiganders depend upon daily.” 

The OMB policy, issued late on January 27, 2025, directs all federal agencies to indefinitely pause a potentially significant amount of federal assistance funding and loans to states and other entities beginning at 5:00 pm today, January 28. As Attorney General Nessel and the coalition note in their lawsuit, OMB’s policy has caused immediate chaos and uncertainty for millions of Americans who rely on state programs that receive these federal funds. Essential community health centers, addiction and mental health treatment programs, services for people with disabilities, and other critical health services are jeopardized by OMB’s policy.  

“This freeze not only jeopardizes the well-being of Michiganders, but it is a clear violation of the Constitution and the laws that govern our country,” Nessel continued. “It undermines the safety and security of American families, which President Trump swore an oath to protect. I will not stand idly by. My office will continue to fight for the rights of Michiganders, and today, that means holding the federal government accountable for this unprecedented and illegal attack on our citizens and our future. We will not let these critical programs be taken away. We will continue to stand up for the people of Michigan and for the laws that protect them." 

Attorney General Nessel and the coalition also argue that jeopardizing state funds will put Americans in danger by depriving law enforcement of much-needed resources. OMB’s policy would potentially pause support for the U.S. Department of Justice's initiatives to combat hate crimes and violence against women, support community policing, and provide services to victims of crimes. In addition, Attorney General Nessel and the coalition of attorneys general note that the OMB policy would halt essential disaster relief funds to places like California and North Carolina, where tens of thousands of residents are relying on FEMA grants to rebuild their lives after devastating wildfires and floods.  

While the administration has attempted to clarify the scope and meaning of the OMB policy, states have already reported that funds have been frozen, jeopardizing services like Medicaid across the country. State agencies have outlined how the OMB Memo will have a direct, immediate, and adverse impact on the Michigan residents who rely on federal financial assistance. While the Department of Attorney General is still seeking clarity on the totality of funds impacted, this freeze could:  

• Gut the Michigan Department of Health and Human Services (MDHHS), which currently receives about $26.6 billion dollars, about 71% of its budget, from federal funding.  Among the many programs administered by MDHHS are Medicaid, the Supplemental Nutrition Assistance Program (SNAP), which feeds low-income families, Temporary Assistance for Needy Families (TANF), and the Children’s Health Insurance Program (CHIP).  
• Harm Michigan children by immediately cutting off funding for Child Development and Care. Under these programs, Michigan receives approximately $600 million each year to ensure the health, education, and developmental wellbeing of about 42,000 Michigan children.  The next payment is scheduled to go out this Friday, and if this Memo blocks those funds, the impact will be drastic, and immediate. The freeze, if not stopped, will also hit Child Development and Care payroll, causing immediate layoffs as early as this week. 
• Further harm Michigan children by slashing assistance to the Michigan Department of Education (MDE). MDE relies on federal funds for special education, child nutrition, and other programs.  If a child has special needs and relies on a 504 plan or an IEP, the federal assistance that makes those plans possible could end at any time, even though Congress has determined the funding should occur.   

A federal freeze would also reduce the Department of Attorney General’s ability to bring violent criminals to justice by cutting funding to important programs the Department administers. The Department relies on federal funding for the Health Care Fraud Division, which investigates and prosecutes Medicaid provider fraud and complaints of abuse and neglect in residential care facilities, and Operation Survivor Justice, which is working to return more than 1,000 fugitives from other states to Michigan to face justice for criminal sexual conducts. Federal money fuels the Department’s Sexual Assault Kit Initiative, which tests sexual assault kits to solve cold-case rapes. It also enables investigations into sexual abuse by clergy, by employees of the Boy Scouts of America, and helps make possible the Departments Missing or Murdered Indigenous Persons (MMIP) Task Force. 

As part of their lawsuit, Attorney General Nessel and the coalition of attorneys general argue that OMB’s policy violates the Constitution and the Administrative Procedure Act by imposing a government-wide stop to spending without any regard for the laws and regulations that govern each source of federal funding. The attorneys general argue that the president cannot decide to unilaterally override laws governing federal spending, and that OMB’s policy unconstitutionally overrides Congress’s power to decide how federal funds are spent.  

This lawsuit was led by the attorneys general of New York, California, Illinois, Massachusetts, New Jersey and Rhode Island. Joining the lawsuit are the attorneys general of Arizona, Colorado, Connecticut, Delaware, Hawaii, Maine, Maryland, Michigan, Minnesota, Nevada, New Mexico, North Carolina, Oregon, Vermont, Washington, Wisconsin, and the District of Columbia.