Gov. Pritzker says federal funds still being withheld; warns of further spending cuts

SPRINGFIELD – Gov. JB Pritzker accused the Trump administration this week of continuing to withhold almost $1.9 billion from Illinois state agencies, nonprofits and small businesses, despite the fact that an order to freeze those funds was rescinded after a federal judge issued a ruling blocking the freeze.

Meanwhile, Pritzker also warned this week that as many as 770,000 Illinoisans stand to lose Medicaid health care coverage under a Republican-backed budget resolution that cleared the U.S. House Tuesday night. That resolution, which would amend the current federal fiscal year’s budget, calls for deep cuts in federal funding for Medicaid, a health insurance program for low-income and disabled individuals that is jointly funded with state and federal money.

In a letter Tuesday to the White House Office of Management and Budget, a letter cosigned by all 16 Democratic members of the state’s U.S. House and Senate delegations, Pritzker demanded answers from the administration about why the funds were being withheld and when the state could expect to see the funds it is owed.

“These are federal funds that were passed by Congress, signed into law, and promised to Illinois,” according to the letter. “State agencies, small businesses, nonprofit organizations, and everyday citizens across Illinois – including in rural communities – are still having trouble accessing allocated federal funding.”

The letter marked the latest development in an intense legal and political battle between the state and the Trump administration that began Jan. 27, one week after Trump’s inauguration, when OMB issued a memo directing federal agencies to temporarily pause distribution of billions of dollars in grants, loans and other kinds of financial assistance.

That memo prompted a flurry of lawsuits, including one that Illinois Attorney General Kwame Raoul joined. The White House soon announced it had rescinded the memo after a federal judge, in a separate suit filed in Washington, D.C., granted a temporary stay blocking its implementation pending further proceedings.

However, White House Press Secretary Karoline Leavitt added confusion to the issue when she posted on social media that the White House had not rescinded the funding freeze. It had only rescinded the OMB memo, “[t]o end any confusion created by the court’s injunction.”

On Tuesday, U.S. District Judge Loren AliKhan, extended the temporary stay by granting a preliminary injunction.

Despite the judicial orders, Pritzker’s letter indicated the administration still is withholding $1.88 billion in federal funds owed to 14 state agencies, boards and commissions, including funds that some of those agencies distribute to outside parties in the form of grants.

“These frozen funds impact programs that provide technical assistance for small businesses, provide affordable solar energy for low-income residents, improve roads and bridges, and more,” according to the letter. “On behalf of our constituents, we are seeking full transparency and accountability on any and all funding that has been paused or interrupted.”

Medicaid funding

In a separate development Tuesday evening, the U.S. House narrowly passed a budget resolution for the remainder of the current federal fiscal year that calls for cutting an estimated $880 billion in federal Medicaid and the Affordable Care Act funding.

The resolution passed, 217-215, on almost a straight party-line vote, with only one Republican voting no.

Under the Affordable Care Act, also known as “Obamacare,” states were allowed to expand eligibility for their Medicaid programs to include all adults with household incomes up to 138% of the federal poverty level – or $36,777 a year for a family of three. The federal government pays 90% of the cost of covering individuals in that expansion group, substantially more than the 52% it pays for people enrolled in traditional Medicaid.

According to the Illinois Department of Healthcare and Family Services, as of June 30, 2024, about 770,000 people in Illinois were covered by Medicaid under that expansion program. Under the 90-10 split between federal and state funds, that translates to $7.5 billion a year in federal funds and $750 million a year in state funds to cover the people in that expansion group.

However, Illinois also has what’s known as a “trigger law” that says it will stop offering Medicaid to individuals in that expansion category if the federal government ever stops funding its 90% match rate. And speaking at a news conference Wednesday morning in Chicago, Pritzker warned that’s what is likely to happen if Congress passes the Republican-backed budget plan.

“There’s no chance that the state of Illinois could pay the $7.5 billion to keep everybody covered,” he said. “That’s just the reality, that if Donald Trump and the Republican Congress eliminate the Medicaid expansion, we will have people who get sick and die because they don’t have coverage from that Medicaid expansion.”

Capitol News Illinois is a nonprofit, nonpartisan news service that distributes state government coverage to hundreds of news outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.