Trump’s federal spending freeze sends Colorado officials scrambling, with billions at stake; state AG plans to sue

A sudden freeze on federal spending by the Trump administration — set to take effect Tuesday — sent Colorado officials scrambling as they tried to figure out the extent and impact of the decision.

Much of Colorado’s $40 billion state budget as well as its hospitals, universities, early childhood programs, research laboratories, and other agencies and groups rely on federal funding for day-to-day operations. It wasn’t immediately clear how President Donald Trump’s freeze, set to take effect at 3 p.m. Mountain time, would ripple through the state or affect residents’ access to services, but state officials already were planning to join a multi-state lawsuit challenging the action.

A 51-page spreadsheet being circulated by the Office of Management and Budget, which authorized the freeze, identified hundreds of programs across federal agencies that are potentially affected by the freeze, according to a copy obtained by The Denver Post. It includes funding for the Special Olympics, nutrition services, public health programs related to maternal and infant health and AIDS prevention, legal and burial services for veterans, clean water grants and more.

State and federal lawmakers told The Post on Tuesday morning that they were working on pulling together a list of state-specific programs that are affected.

State lawmakers said it wasn’t clear if the order applied to Medicaid, which provides health care to a quarter of Coloradans. But Trump’s directive did appear to cover Pell grants, housing vouchers and such disparate programs as Medicaid fraud prevention and gun safety services.

Regular funding to Denver Health and federally qualified health centers, which are the safety net health care providers across the state, also appeared to be in jeopardy. A spokeswoman for Denver Health said the agency was still working to understand the impacts.

New guidance issued by the Trump administration early Tuesday afternoon said that “any payment required by law to be paid will be paid without interruption or delay.” The guidance said the order did not apply to SNAP benefits — more commonly known as food stamps — or to federal assistance “across the board.”

Still, the scale of the order — and the lengthy list of programs under review — wreaked havoc in the state Capitol.

“I think the impact to people’s lives will be catastrophic,” said Rep. Shannon Bird, a Westminster Democrat who sits on the legislature’s powerful Joint Budget Committee. “It’s chaos.” 

The budget memo requires all federal agencies “to identify and review all Federal financial assistance programs and supporting activities consistent with the President’s policies and requirements.” Out of nearly $10 trillion identified in federal spending in the last fiscal year, it said nearly $3 trillion went to federal assistance.

The memo says assistance should be focused on things like manufacturing, government efficiency and “ending ‘wokeness.’ ” The memo goes on to attack “Marxist equity, transgenderism and green new deal social engineering policies” as a “waste of taxpayer dollars.”

Several states, including Colorado, quickly announced plans to sue the federal government over the pause, with a lawsuit expected within hours.

“The Trump White House freeze on congressionally mandated federal aid is reckless and unprecedented,” Colorado Attorney General Phil Weiser said in a statement. “This action takes the power of the purse away from Congress, violates the separation of powers, and is already causing massive harm in Colorado, undermining delivery of healthcare, education, and public safety.

“As attorney general, I will continue to defend Coloradans and the Constitution. This government funding shutdown is illegal and must be stopped by the courts. That is why I will join other state attorneys general in filing a lawsuit to do just that.”

The executive branch is obligated to spend funds passed by Congress. A 1974 law, the Impoundment Control Act, gives Congress oversight of what the executive branch may delay spending on. Withholding congressionally authorized spending was a key reason for Trump’s first impeachment during his first term.

Guidance issued by the Trump administration Tuesday explicitly pushed back on the freeze being an impoundment of federal spending. It called it “a temporary pause” to ensure that spending complies with Trump’s recent executive orders.

A spokesperson for Gov. Jared Polis said the office was still looking into the issue. Jack Stelzner, a spokesman for U.S. Rep. Diana DeGette, said the Denver congresswoman’s office had been inundated with calls from constituents about what the order meant. Grace Martinez, a spokeswoman for U.S. Rep. Joe Neguse, said his office was trying to pull together a list of impacts in northern Colorado. Both are Democrats.

“What does this mean for Colorado? Funding to our police departments, our rural hospitals, programs for homeless veterans. Nearly 9,000 kids in CO Head Start programs may be locked out,” U.S. Sen. John Hickenlooper, a Democrat, said on X. “Trump is sacrificing working Americans.”

Representatives for Colorado’s Republican members of Congress — Lauren Boebert, Jeff Crank, Gabe Evans and Jeff Hurd — did not immediately return requests for comment.

Members of the state legislature’s budget committee were likewise trying to make sense of the decision, and legislative leaders were also scrambling to pull together a list of impacted programs.

Sen. Jeff Bridges, a Greenwood Village Democrat and chair of the budget committee, called it a “very early, quickly written memo that has broad and far reaching consequences.” It comes as the state is grappling with its own budget shortfall of up to $1 billion, which adds up to “potentially extremely painful cuts” to state services, he said.

Of the president’s action, he said: “There certainly were blusterings, and maybe even tweets, but I did not expect it to culminate in a memo like this so quickly, and with a complete and total lack of any kind of notice.”

“We’re completely locked out”

The impact of the freeze is already being felt in the state.

The Colorado Coalition for the Homeless, which provides health care and housing for homeless Coloradans, cannot access its regular funding streams that help cover rent for hundreds of people and provide health care for thousands more. Federal funding also helps support the coalition’s staffing.

“We’re completely locked out,” said Cathy Alderman, a spokesperson for the coalition, calling the Trump administration’s move “thoughtless.” “Which means, if that’s not resolved, we’re not going to be able to pay people’s rents next week, which might mean they’re subject to eviction. And it’s hundreds of people.”

With the freeze in place, the state’s 20 community health centers would lose about $24 million per month, including about $9 million that goes toward payroll and other basic operations, according to the trade group Colorado Community Health Network.

About 857,000 people use community health centers in Colorado. They offer free or low-cost care to people without insurance and serve a disproportionate share of those covered by Medicaid.

“This freeze in federal funding will stress an already ailing system, jeopardizing care for the one in seven Coloradans who consider (community health centers) their primary care home,” the group said in a statement. “We know that without access to preventative primary care, patients get sicker, and treatments become more life-threatening, and more costly on the system.”

Almost two-thirds of centers operated in the red before the pause, the group’s statement said. Centers blamed the Medicaid unwinding, saying that patients previously covered by the program hadn’t found new sources of insurance and couldn’t pay for their care. In the Denver area, one network started cutting services, while another left positions vacant.

Bird and Rep. Emily Sirota, a Denver Democrat who also sits on the Joint Budget Committee, both said money to Medicaid had been shut off Tuesday morning. Marc Williams, spokesman for the state’s Medicaid authority, said he was checking the veracity of that report. 

“What appears to have happened is something very reckless,” Bird said. “Actions (were) taken in complete reckless disregard for the people of Colorado.”

School districts, universities react

Denver Public Schools is projected to receive $96 million in federal grant funding — which represents 6.7% of the district’s general fund — for the 2024-25 academic year. This means Trump’s order could affect the district’s Head Start program and the federal meal reimbursements DPS receives for students living in poverty as soon as next school year, said spokesman Scott Pribble.

“Without these funds, we would need to reduce services or look for other local funding sources,” he said in a statement. “Any changes to federal funding will directly impact students.”