BOSTON (State House News Service) — Policymakers, nonprofits and others who rely on federal funding are scrambling to unpack the significance of a Trump administration freeze on most federal grants and loans, a shift that Gov. Maura Healey warned will be "devastating" for Massachusetts.

The interim head of the federal Office of Management and Budget on Monday wrote to the heads of federal executive departments and agencies instructing them to "temporarily pause all activities related to obligation or disbursement of all Federal financial assistance" while undertaking a review of their funding distributions designed to align spending with President Donald Trump's political and ideological priorities.

The pause will take effect at 5 p.m. Tuesday, according to OMB, though it already faces legal challenges already. A group of Democratic attorneys general, including Massachusetts Attorney General Andrea Campbell, said Tuesday afternoon they would sue and ask a court to halt enforcement of the freeze.

"Congress controls the pursestrings, and the executive branch cannot decide to halt funding just because they don't like how Congress chooses to spend it," Campbell said at a virtual press conference alongside several other AGs.

Reuters also reported that groups representing nonprofits, public health workers and small businesses sued the Trump administration earlier Tuesday.

If the pause takes effect, it could carry major implications for Massachusetts. Federal aid is always a big source of budget revenue for state government, and state records show Massachusetts expects to receive more than $15 billion in federal reimbursements in fiscal year 2025. Federal money also flows to nonprofits, local governments and many other entities in the Bay State.

Healey said she worries the pause will impact funding for a whole host of services, ranging from child care to road maintenance to energy affordability.

"It's devastating, and it touches all aspects, which is why I don't understand this," Healey told reporters at the State House. "Donald Trump ran on a promise to lower costs. All he's done is offer proposals and take actions that are going to raise costs for people, raise costs for businesses and hurt our economies."

It was not immediately clear how much money headed to Massachusetts might be affected, or how long the review and "temporary pause" might last.

Campbell said Massachusetts on Monday tried to draw almost $40 million in Medicaid funding "and haven't received the payment yet."

"This is just one potential funding stream that could be impacted by this reckless order," she said.

While federal aid is governed in part by Congressional appropriations and longstanding funding formulas, OMB Acting Director Matthew Vaeth said the administration wants to ensure trillions of dollars the federal government spends in grants and loans match Trump's goals.

"Financial assistance should be dedicated to advancing Administration priorities, focusing taxpayer dollars to advance a stronger and safer America, eliminating the financial burden of inflation for citizens, unleashing American energy and manufacturing, ending 'wokeness' and the weaponization of government, promoting efficiency in government, and Making America Healthy Again," Vaeth wrote in the memo, a copy of which was published by The New York Times. "The use of Federal resources to advance Marxist equity, transgenderism, and green new deal social engineering policies is a waste of taxpayer dollars that does not improve the day-to-day lives of those we serve."

Medicare and Social Security benefits would not be impacted by the pause, the memo said.

Federal offices and agencies must identify "any legally mandated actions or deadlines for assistance programs arising while the pause remains in effect" and report that information to OMB, Vaeth said. They are also required to submit detailed information about affected spending activity by Feb. 10.

Vaeth instructed agencies to review pending federal financial assistance announcements to ensure they comply with Trump's priorities. To the extent allowed by law, agencies could modify unpublished aid announcements, withdraw already-announced funding or cancel awards "that are in conflict with Administration priorities" under the OMB memo.

The administration also ordered agencies to give a "senior political appointee" responsibility to ensure each federal aid program "conforms to Administration priorities," and to investigate programs to "identify underperforming recipients."

"OMB may grant exceptions allowing Federal agencies to issue new awards or take other actions on a case-by-case basis," Vaeth wrote. "To the extent required by law, Federal agencies may continue taking certain administrative actions, such as closeout of Federal awards (2 CFR 200.344), or recording obligations expressly required by law."

Officials and budget experts in Massachusetts, where Democrats currently hold all congressional seats and every constitutional office, have been concerned about the potential loss of federal funds under Trump.

"The order that came out from President Trump last night will have the effect of cutting off federal funding to our states, and that's federal funding that's going to help seniors heat their homes, that's going to help people pay for child care and important programs that parents and families need," Healey said. "It's going to cut off funding for food, for health care, transportation, important infrastructure projects in our state."

The Associated Industries of Massachusetts, one of the state's largest business groups, said in an alert to members just before 1:30 p.m. urging them to get in touch with the organization to share concerns.

"Many Massachusetts companies receive federal grants and loans for a variety of purposes. Some of those companies could now face issues making payroll at the end of the month," AIM wrote in its alert. "AIM is working with members of the Massachusetts Congressional delegation to determine the moratorium's potential effect on employers."

Healey did not say if she would file legislation to put state dollars to work to cover any lost federal funding, telling reporters that "we've got to take everything a step at a time."

Asked about options to keep payrolls flowing amid a federal funding pause, Healey replied, "We've got to see what happens in the courts."

"This is not just a blue state issue. This is a blue state, red state, every state issue," she said. "All of our states rely on this federal funding, so my hope is that a court will quickly put an end to his overreach of executive authority. He doesn't have the power to do this, and more than that, it's really, really harmful."

Congressman Richard Neal added his voice to the chorus of criticism, saying his office heard concerns from "local governments, school superintendents, veterans organizations, and others."

"Our message is clear: we hear you, we're here for you, and we will not let this stand," Neal wrote on social media. "Congress oversees the public purse, not the President."

[Ella Adams and Sam Doran contributed reporting.]

Written by Chris Lisinski/SHNS