Trump administration axes $1.5B in blue-state grants over reported waste and mismanagement concerns
Office of Management and Budget targets California, Colorado, Illinois and Minnesota projects at DOT and CDC
The Trump administration’s budget office told FOX Business Wednesday that it is canceling $1.5 billion in blue-state grants, citing concerns about how funds are being managed in California, Colorado, Illinois and Minnesota.
The Office of Management and Budget (OMB) said it will target projects at the Department of Transportation (DOT) and the Centers for Disease Control and Prevention (CDC), cutting $943 million and $602 million, respectively.
An OMB spokesperson told the New York Post that the states were being targeted due to "waste and mismanagement" of taxpayer funds.
The announcement follows OMB launching a sweeping review of federal funding for several Democratic-led states in January, which required states to submit detailed receipts proving no funds were being mishandled, CBS News reported.
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The Office of Management and Budget is planning to cancel over $1 billion in grants from the Department of Transportation and the Centers for Disease Control and Prevention. (Stephen Goin)
The new initiative reflects a shift in fiscal policy toward "America First" priorities by withholding funds from states that maintain sanctuary policies or projects the administration deems wasteful.
Concerns cited include tax support for illegal immigrants, green initiatives and alleged fraud in certain states, such as the $250 million COVID-era scam in Minnesota uncovered in the "Feeding Our Future" case.
Several DOT and CDC programs in blue states could be affected by the funding cuts, including equity-focused infrastructure projects and public health initiatives the OMB previously criticized as "social engineering" rather than legitimate public health efforts.
"The use of Federal resources to advance Marxist equity, transgenderism, and Green New Deal social engineering policies is a waste of taxpayer dollars that does not improve the day-to-day lives of those we serve," the OMB previously said in 2025.
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The Trump administration's budget office is canceling $1.5 billion in funding for DOT and CDC projects in four blue states over funding misuse concerns. (Al Drago/Bloomberg via Getty Images)
A spokesperson for the Colorado governor’s office told FOX Business that the state has not received any cancellation notices, but condemned the proposed cutbacks as "unlawful" and "absurd." The spokesperson indicated that the state’s environmentally oriented transportation projects — including EV infrastructure, rail improvements, and research into hydrogen and natural gas technologies — are being unnecessarily scrutinized.
"At this time, Colorado has not received any official cancellation notices from the federal administration related to these grants," the spokesperson said. "There is nothing ‘woke’ about making sure American roads are safer for everyone. We will continue to fight back against unlawful grant terminations by the federal administration, as we have done with repeated success over the past year. For every dollar Colorado contributes to the federal government, we only get 90 cents in return, so any attempt to strip away funding to our state is absurd."
Trump already halted more than $10 billion in federal childcare and social services funding to the four states, as well as New York, in January over concerns that some benefits had been fraudulently funneled to noncitizens, the Post reported.
In October 2025, the Trump administration labeled federal funding for various climate and renewable energy initiatives as a "Green New Scam" and subsequently terminated or paused $7 billion in grants, with Colorado among the primarily affected states, according to local media CPR News.
In California, San Francisco was slated to receive $15 million to expand its electric vehicle charging network, with a focus on "disadvantaged communities that are marginalized by underinvestment and overburdened by pollution," city officials said in 2025.
Similarly, the California Reducing Disparities Project, an equity-focused public health program serving marginalized communities, including racial minorities and LGBTQ+ populations, was awarded $60 million over six years.
Chicago has drawn scrutiny for its initiatives focused on diversity, equity and inclusion.
The Biden-era Red Line Extension and the Red and Purple Modernization Programs, which together total approximately $2.1 billion, were paused in 2025 pending a review of "race-based contracting" practices.
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CDC research may be subject to potential cuts. (Nathan Posner/Anadolu Agency via Getty Images)
Additionally, funding for CDC research on sexually transmitted diseases affecting "adolescents and young adults, gay, bisexual, and other men who have sex with men" may be subject to potential cuts. The project, which listed Chicago as a recipient, was in line to receive $7 million, The Post reported.
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The Trump administration may expand grant cancellations in the future amid concerns about systemic failures in sanctuary city leadership, which surfaced prominently following Minnesota’s fraud schemes.
The governors of California, Colorado, Illinois and Minnesota did not immediately respond to FOX Business' request for comment.
Fox News Digital's Greg Norman contributed to this report.