Federal Courts Block Trump Administration Funding Cuts to Multiple States

Federal courts issued two major rulings on December 24 and 25, 2025, blocking the Trump administration from withholding federal funds from states over policy disagreements. In one ruling, U.S. District Judge Mary McElroy ordered the restoration of $233 million in disaster and counterterrorism funding to 12 states and the District of Columbia. The Department of Homeland Security and the Federal Emergency Management Agency had slashed these grants from sanctuary jurisdictions, including New York and Massachusetts, for refusing to assist with federal immigration efforts. Judge McElroy characterized the cuts as "arbitrary and capricious" and an "unconscionable" abuse of power.

Separately, a federal judge ruled that the administration must restore housing support funding administered through the U.S. Department of Housing and Urban Development. This decision followed a lawsuit by Kentucky, 19 other states, and the District of Columbia challenging a 30% cap on permanent supportive housing and new reapplication requirements for previously approved funds. In Kentucky, this ruling restored more than $21 million intended for veterans, seniors, and families with children.

State leaders, including New York Attorney General Letitia James and Massachusetts Attorney General Andrea Joy Campbell, hailed the results as a victory against the punishment of states for resisting federal immigration agendas. The Department of Homeland Security announced its intention to appeal the disaster funding ruling, with Assistant Secretary Tricia McLaughlin describing the decision as "judicial sabotage."