As questions continue over whether President Donald Trump can implement a federal funding freeze, a new report from Santa Clara County estimates that roughly $3.6 billion, or nearly 30%, of the county’s current budget comes from the feds.
The report also shows where the county will be hit the hardest if that funding were to disappear, as 80 percent of the total money Santa Clara County gets from the federal government goes to a single purpose: health care.
In late January, the Trump administration ordered federal agencies to stop disbursing grants and loans until they decided which spending aligned with the president’s priorities. Several federal judges quickly blocked the order, but a Monday ruling from a federal judge in Rhode Island said that the Trump administration continued “to improperly freeze federal funds and refused to resume disbursement of appropriated federal funds.”
Another executive order mandates that funds be cut off from state and local governments that have proclaimed themselves as “sanctuaries” for immigrants living in the country illegally. Santa Clara County sued the Trump administration over the order last week.
The onslaught of executive orders emerging from Trump’s Resolute Desk has created “tremendous uncertainty” for the upcoming budget process, County Executive James Williams revealed at a recent Board of Supervisors meeting.
Williams, who served as county counsel during Trump’s first term, told The Mercury News that most of the funding coming from the federal government is “inextricably linked to everything that we do on a day-to-day basis in some way or another.”
“That’s what’s at stake here, and it can be hard to tangibly understand that, but that is the reality,” he said.
The analysis of the county’s current $12.5 billion budget began weeks before Trump even took office. At a Dec. 3 board meeting, Supervisor Sylvia Arenas asked county officials to conduct the review to prepare “for the possibility of the weaponization of provisions by the Trump administration.”
“The impact of Trump illegally withholding federal funding from our community would be staggering,” Arenas said in a statement in response to report. “The detailed information I requested will help us further prepare and show how clear it is that our county must lead the efforts to prevent Trump from illegally withholding federal resources from our families.”
The $3.6 billion outlined in the report included money coming both directly from the federal government as well as indirectly from the feds through the state.
Roughly 80%, or $2.9 billion, of the federal revenues are for health care, with almost all of that related to Medicaid and Medicare. The Santa Clara Valley Healthcare System is the second-largest county-owned health and hospital system in the state. And on April 1, the county will add a fourth hospital to the system as it takes over the operations of Regional Medical Center in East San Jose — a hospital with a high volume of Medicaid and Medicare patients.
Republicans in Congress are also examining cuts to Medicaid — a public health insurance program that covers low-income individuals — to help fund Trump’s other priorities.
Williams said the county and other safety-net hospitals are highly dependent on revenues from Medicaid, which is referred to as Medi-Cal in California.
“The ability of those hospitals to operate and to provide trauma care, to provide burn care, NICU care — all of the kinds of emergency services that we all just take for granted and are available in every major city in the state — those services are dependent on the federal Medicaid program,” Williams said.
The remaining $729 million from the feds is largely for social services, including programs such as CalWORKS and SNAP. Other grants support refugees, provide disaster assistance, help repair bridges or fund public health initiatives relating to tuberculosis, HIV/AIDS and maternal and child health.
Over the last several weeks, the county has reported difficulty with submitting invoices for reimbursements, with some portals still offline despite the judge’s ruling that the Trump administration cannot freeze federal funding. Federal workers have also canceled meetings with county staff related to grants, according to Williams.
Board President Otto Lee said the biggest concern right now is the potential “huge strain on our cash flow” as the county employs and has to make payroll for more than 23,000 workers.
“That’s the type of issue we have to deal with immediately,” he said. “We certainly have a little buffer, we can handle a week or two or three. But we cannot do this for months.”
The money that Trump has attempted to freeze already has been appropriated by Congress, sparking further concern of how the next federal budget could impact state and local governments across the country. The federal fiscal year runs from Oct. 1 to Sept. 30, and the Republican-controlled Congress is eyeing massive spending cuts.
Meanwhile, the county is set to give its mid-year budget report in late February, and the 2025-26 budget process will get underway in the coming months. Last year, the county worked to close a $250 million deficit as labor costs outpaced revenues. At the time, officials projected a $158 million deficit for the 2025-26 fiscal year.
“We really need to get back to normal,” Lee said. “The challenge of the county is difficult as is — we don’t need more self-created injuries, shall we say, that are being caused by some political maneuvering.