The Trump administration has issued a sweeping new executive order that could reshape how billions in federal grant dollars are distributed, sparking alarm among city and county leaders who rely heavily on these funds to sustain essential public services.
Announced on Aug. 7, the order—Improving Oversight of Federal Grantmaking—is intended, according to the administration, to “streamline and strengthen oversight and coordination” of the federal discretionary grant process. It directs agencies to review all awards to ensure they align with the president’s priorities and to conduct yearly assessments of grantees’ progress.
Under the new rules, agencies are expected to simplify grant application language while prioritizing projects that “advance the President’s policy priorities.” In addition, the order empowers federal agencies to reform policies so they can terminate awards that are deemed inconsistent with the administration’s interests.
Lobbying groups representing local governments say the changes could complicate, rather than simplify, the already complex grantmaking process. The National Association of Counties (NACo) warned that counties depend on federal support to deliver essential programs in health, social services, public safety, disaster response, and infrastructure investment.
“Changes to federal grant policy, especially ones that apply retroactively, may create unintended administrative or financial consequences when implementing these programs,” NACo stated in an Aug. 19 post.
The order also signals a political realignment in how federal money is distributed. It instructs agencies to avoid funding what the administration has called “diversity, equity, and inclusion and other far-left initiatives.” In practice, this means projects tied to racial or gender equity, support for undocumented immigrants, or recognition of transgender people could face funding roadblocks.
The administration argues that the new framework broadens access by encouraging grants to a “wide range of recipients rather than to a select group of repeat players.” Grant recipients, however, will now need to submit detailed written justifications before drawing down awarded funds—a step some local leaders see as burdensome.
The National League of Cities (NLC) said it is still reviewing the full impact of the executive order but expressed serious concerns. “The executive order adds to the bureaucratic process with more political reviews and another update to the Uniform Guidance which underpins all grants,” an NLC spokesperson said in an email.
The spokesperson also criticized the order’s assertion that grants already in process could be canceled. They stated the order “falsely asserts that grants already in process can be partially or fully terminated without a substantial cause.” That, they added, is “counter to Congress’ Constitutional power of the purse.”
To help communities adapt, the NLC said it is offering training for both small towns and large cities on how to apply for and manage grants under the new guidelines. Meanwhile, county leaders are urging Congress and the administration to safeguard already-approved projects. NACo called on policymakers to “support the stability and continued funding of critical projects and programs that have been properly approved, allocated and distributed.”
The move represents the latest in a series of Trump administration actions restricting federal funding for initiatives seen as politically out of step with White House priorities. For cities and counties already grappling with limited budgets, the stakes are high: funding cuts could affect everything from local police staffing to disaster preparedness and community health clinics.
Originally reported by Danielle McLean in Construction Dive.
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