Federal Funds Freeze Leaves Nation, Pasadena Scrambling For Answers

Pasadena city officials endured a turbulent 24-hour roller coaster ride this week after receiving an extraordinary directive from the White House Office of Management and Budget to cease spending federal funds by 2 p.m. Tuesday.

The federal order, issued by Acting OMB Director Matthew Vaeth, touched off frantic efforts at city halls across the nation, as local governments scrambled to understand its implications for their federal funding streams.

Councilmember Rick Cole apparently made the first public mention of the brewing crisis in an oblique remark during Monday night’s Pasadena City Council meeting.

“We face very serious looming threats,” Cole said at the meeting. “The City Manager mentioned to me that we’re at risk of $60 million worth of federal money being yanked should the current administration make good on its threats already in writing to us.”

The directive identified its ultimate targets as what the OMB memo described as federal resources being used for “Marxist equity, transgenderism, and green new deal social engineering policies,” affecting programs from housing assistance to meals for seniors.

The White House order initially set a 2 p.m. Tuesday deadline for the funding freeze to take effect, creating urgent pressure on local governments to respond.

By early Tuesday afternoon, the situation had reached a crisis point as organizations nationwide reported being locked out of federal payment systems, including those handling Medicaid reimbursements and other critical funding streams like the First Start childhood education program.

Relief came at approximately 1:00 p.m. Tuesday when U.S. District Judge Loren AliKhan in Washington, D.C. issued a temporary restraining order blocking the administration from freezing “open awards” until at least February 3 at 5 p.m.

AliKhan will preside over a Monday, Feb. 3 at 11 a.m. EST hearing on whether the freeze, in whole or in part, may proceed.

The National Council of Nonprofits, the American Public Health Association, Main Street Alliance and SAGE filed a lawsuit early Tuesday challenging the directive, arguing that OMB had improperly targeted grant recipients based on First Amendment rights to free expression and association.

California Attorney General Rob Bonta announced the state would lead a coalition of 24 state attorneys general challenging the order, which he termed “reckless, dangerous, unprecedented in scope and devastating in its intended effect.”

While some programs received exemptions in the OMB order, at least on paper, including Social Security, Medicare, and disaster relief for the recent Eaton Fire, crucial local services like Community Development Block Grants and Emergency Solutions Grants remain in limbo.

The freeze potentially threatens several key Pasadena initiatives, including the Community Development Block Grant (CDBG), Emergency Solutions Grant (ESG), and Home Enhancement Loan Program (HELP), which provide vital housing assistance to city residents.

Pasadena officials continue monitoring the situation as the OMB reviews over $3 trillion in federal assistance programs. The order also required federal agencies to submit detailed program information by February 10. California alone had expected to distribute $168.3 billion in federal funds through June 30.