The Trump administration’s budget office told FOX Business on Wednesday it is canceling $1.5 billion in grants to blue states, citing concerns about how the funds are managed in California, Colorado, Illinois and Minnesota.
The Office of Management and Budget (OMB) said it would target Department of Transportation (DOT) and Centers for Disease Control and Prevention (CDC) projects, cutting $943 million and $602 million, respectively.
An OMB spokesperson told the New York Post that states were being targeted due to “waste and mismanagement” of taxpayer funds.
The announcement follows the OMB’s launch of a sweeping review of federal funding for several Democratic-led states in January, which required states to submit detailed receipts proving no funds had been mismanaged, CBS News reported.
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The Office of Management and Budget plans to cancel more than $1 billion in grants from the Department of Transportation (DOT) and the Centers for Disease Control and Prevention (CDC). (Stephen Goin/Fox News)
The 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 unnecessary.
Concerns cited include tax support for illegal immigrants, green initiatives and alleged fraud in some states, such as the $250 million COVID-era scam. in Minnesota discovered in the “Feeding our future” affair.
Several DOT and CDC programs in blue states could be affected by funding reductions, including equity-focused infrastructure projects and public health initiatives that OMB previously characterized as “social engineering” rather than legitimate public health efforts.
“Using federal resources to advance Marxist equity, transgender, and social engineering policies of the Green New Deal is a waste of taxpayer dollars that does not improve the daily 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 due to embezzlement concerns. (Al Drago/Bloomberg via Getty Images / Getty Images)
In January, Trump stopped more than $10 billion in federal funding for child care and social services to four states, as well as New York, due to concerns that some benefits were fraudulently transferred to non-citizens, the Post reported.
In California, San Francisco was 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, received $60 million over six years.
Chicago drew lots scrutiny of its diversity, equity and inclusion initiatives.
The Biden-era red line extension and the Red and Purple modernization programs, which together total about $2.1 billion, were suspended in 2025 pending a review of “race-based contracting” practices.
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CDC research could be subject to potential cuts. (Nathan Posner/Anadolu Agency via Getty Images / Getty Images)
Additionally, CDC research funding on sexually transmitted diseases affecting “adolescents and young adults, gays, bisexuals, and other men who have sex with men” could be subject to potential cuts. The project, which listed Chicago as a beneficiary, was in line to receive $7 million, The Post reported.
In October 2025, the Trump administration called federal funding for various climate and renewable energy initiatives a “new green scam” and subsequently terminated or suspended $7 billion. in subsidieswith Colorado among the hardest-hit states, according to local media CPR News.
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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 in the wake of Minnesota’s fraud schemes.
The governors of California, Colorado, Illinois and Minnesota did not immediately respond to FOX Business’ request for comment.
Greg Norman of Fox News Digital contributed to this report.