Recent policy changes from the Office of Management and Budget (OMB) have left state and local finance officers grappling with significant uncertainty regarding federal funding. Although a memo freezing federal grants was rescinded, many programs remain in limbo. This situation has created challenges for governments relying on federal support, particularly in areas such as environmental initiatives and community health. Leaders from the Government Finance Officers Association (GFOA) are working diligently to provide guidance and resources to their members during this tumultuous period.

Federal Policy Reversals Spark Confusion Among State Agencies

The sudden reversal of federal policies has caused considerable disruption for state and local governments. Initially, an OMB directive halted the disbursement of approved funds, leading to widespread confusion. Despite subsequent court orders and the memo's cancellation, the impact persists. Many agencies are still awaiting crucial financial support, affecting both ongoing and planned projects. The uncertainty surrounding these changes has left finance officers scrambling to adapt and seek reliable information.

On average, nearly 40% of state revenue originates from federal sources. The January memo from OMB required agencies to review whether their grant programs aligned with executive orders issued by the previous administration. Even though two federal judges ordered the resumption of fund disbursements, and OMB rescinded the memo, the situation remains unstable. For instance, the Environmental Protection Agency has paused disbursements for its "Solar for All" program, intended to bring solar power to low-income households. Similarly, community health and Head Start programs have faced delays in accessing necessary funds. In Colorado alone, over $570 million in approved grants have been withheld.

GFOA Provides Guidance Amidst Funding Disruptions

The Government Finance Officers Association (GFOA) is playing a critical role in assisting its members through this challenging time. With a membership exceeding 25,000 professionals responsible for financial management at various government levels, GFOA has become a vital resource for navigating the current uncertainties. The organization is focusing on providing accurate and timely information to help members maintain essential services and project continuity.

GFOA CEO Chris Morrill and Emily Brock, director of the Federal Liaison Center, emphasize the importance of resilience and preparedness. They highlight that while some funds, such as those for transportation and transit, appear unaffected, others, particularly those requiring regular drawdowns, face potential disruptions. Programs in education and community health, for example, could suffer if funds are delayed or halted. To mitigate risks, GFOA offers a range of resources, including fiscal first aid guides developed from lessons learned during the Great Recession and the COVID-19 pandemic. Additionally, they have established a special landing page and alert system to disseminate real-time updates. The association is also collaborating with other groups to advocate for stable funding and promote the benefits of municipal bonds in infrastructure development. As the situation evolves, GFOA continues to serve as a beacon of support for its members, ensuring they have the tools and information needed to navigate these uncertain times.