The White House Office of Management and Budget (OMB) has instructed federal agencies to conduct an unprecedented review of federal funding directed to a group of predominantly Democratic-controlled states and the District of Columbia, sending a memo this week that seeks detailed information on grants, loans, contracts and other monetary awards.

The move comes amid the Biden-era shift in urban and state policy choices that President Donald Trump’s administration has sharply criticised, particularly regarding immigration enforcement and allegations of misuse of federal funds.

The memo, issued to nearly all departments except the Department of Defense and the Department of Veterans Affairs, directs agencies to submit comprehensive data by late January covering federal spending in California, Colorado, Connecticut, Delaware, Illinois, Massachusetts, Minnesota, New Jersey, New York, Oregon, Rhode Island, Vermont, Washington, Virginia and the District of Columbia.

The OMB described the exercise as a data-gathering effort intended to help “reduce the improper and fraudulent use of those funds,” and emphasised that it does not involve immediate withholding of money.

President Trump has publicly stated his intention to halt federal payments to jurisdictions he describes as sanctuary jurisdictions — areas that limit cooperation with federal immigration authorities — with a target start date of February 1, although specific mechanisms and legal pathways for withholding funds have not yet been unveiled.

The states under review include those that contain sanctuary cities or have limited cooperation policies with U.S. Immigration and Customs Enforcement, according to administration guidance.

OMB Director Russell Vought is overseeing the initiative, which officials say will provide the administration with a clearer picture of how federal money flows to these states and may inform future policy decisions aimed at combating fraud and aligning spending with federal priorities.

This development follows earlier attempts by the administration to pause or challenge certain funding streams — including efforts to withhold child care subsidies and other aid to select states, actions that were temporarily halted by a federal judge.

While Republican officials frame the review as necessary for fiscal accountability, critics argue the focus on Democratic-led states represents a partisan approach to federal funding oversight.

The Biden Administration and state officials have challenged previous funding suspensions in court, underscoring the potential for legal disputes as the Trump administration pursues heightened scrutiny of federal spending patterns in jurisdictions governed by opposition party leadership.