Could politics put your city's funding at risk?

**Adrian Ma** (0:01)
N-P-R. This is The Indicator from Planet Money. I'm Adrian Ma.

**Wailin Wong** (0:08)
And I'm Wayland Wong. Federal funding is getting more political, maybe even personal. Department of Energy officials admitted in a recent court filing that they had canceled hundreds of grants based on whether projects were located in blue states.

**Adrian Ma** (0:24)
And if the administration gets its way, it could be empowered to make funding decisions based on political leanings, and not just with energy-related grants, but all federal grants. That's because the Office of Management and Budget has proposed sweeping changes to how the federal government doles out money to academic researchers, nonprofits, and local governments.

**Wailin Wong** (0:44)
Among these changes, senior political appointees would have to sign off on federal grants, and funding could be cut off mid-project if there's a change in quote, agency priorities.

**Adrian Ma** (0:54)
The OMB says these revisions will increase accountability and help ensure that taxpayer money isn't wasted or misused. But the proposal is worrying many grant recipients who don't want future funding to be at the mercy of shifting political wins.

**Wailin Wong** (1:08)
Today on the show, we focus on one big category of recipients, local governments. We go back to the pandemic when cities and towns got hundreds of billions of dollars in federal grants. We see how they used this money, whether it was effective, and how these new proposed changes could upend future dollars for these communities.

**SPEAKER_3** (1:31)
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**Joanna Strober** (1:41)
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**SPEAKER_3** (2:19)
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**Adrian Ma** (2:33)
The Office of Management Budget released its proposal in May, and among the groups that read it with concern was the National League of Cities. It's this organization that lobbies on behalf of more than 19,000 cities, towns, and villages in the US.
Dante Moreno is a lobbyist there.

**Dante Moreno** (2:49)
The federal government would be able to terminate any federal grant moving forward, not because your community isn't doing a good job, but because the federal agency doesn't want to fund it anymore. You're now putting communities in this really awkward position of like, I thought I could trust the federal government, but it turns out when we sign a grant contract, maybe that's not worth anything.

**Wailin Wong** (3:09)
Dante says, imagine a city applies for and gets awarded a $500,000 grant for a construction project that will take four years to complete. The city breaks ground and starts building. Then, two years in, the federal agency overseeing the grant says, we're canceling your grant because this project no longer lines up with administration priorities.

**Dante Moreno** (3:30)
Now you have a problem in blight because you have this project that you can't finish.
It's just really concerning. We're in this huge period of uncertainty right now. We don't know if the whole federal grant game is going to change in almost two months.

**Adrian Ma** (3:43)
Dante says, it's important to look back at a recent example of how federal grants to local governments have played out. And perhaps there's no better example than the American Rescue Plan Act, or ARPA.
President Biden signed it into law in 2021 during the thick of the COVID-19 pandemic.

**Dante Moreno** (4:00)
We call it once in a generation type of investment in America. ARPA was so flexible that a community could say, what do I need to not only get on my feet, because right now it's the middle of COVID, but also what have I been needing to do for often 30 or 40 or 50 years that I can now do?

**Wailin Wong** (4:20)
The program distributed $350 billion to state and local governments. It was meant as a lifeline for communities that saw revenues fall off a cliff with the pandemic.