After what Kentucky Gov. Andy Beshear described as “one of the most bizarre days” he’s seen in government, the Trump administration on Wednesday rescinded a memo that had spawned confusion across the nation including in Kentucky.
The confusion began after the U.S. Office of Management and Budget (OMB) issued a memo late Monday freezing trillions of dollars in federal grant and loan payments. On Wednesday, the OMB revoked the memo.
Uncertainty over what funding would be affected had sparked chaos and criticism in Kentucky on Tuesday. Public agencies and nonprofits said they were reviewing the situation and monitoring changes in information throughout the day. By Tuesday evening, a federal judge blocked the order from being implemented.
Nearly half, 46.4%, of state revenue in Kentucky in fiscal year 2022 came from the federal government, according to an analysis by The Pew Charitable Trusts.
Janiene Bohannon, communications director for the Appalachian Regional Commission (ARC), said in a Wednesday email that the new directive from OMB “lifts the spending pause.” The commission funds economic development and other programs in Kentucky.
“ARC is resuming operations and will remain in close contact with OMB to ensure compliance with relevant Executive Orders and guidance,” Bohannon said.
However, the Kentucky Nonprofit Network was “unsure exactly what’s happening,” following a confusing X post from White House Press Secretary Karoline Leavitt that indicated the federal funding freeze could “remain in full force and effect” without the memo.
“The OMB memo has been rescinded as a result of the TRO, but her tweet indicates a freeze is still in effect per the Executive Orders,” said Danielle Clore, the CEO of the network, in an email, referring to the temporary restraining order obtained Tuesday by a group of nonprofits and other organizations.
A second federal judge on Wednesday appeared ready to issue a similar order blocking the funding freeze in a lawsuit filed by Democratic attorneys general.
A spokesperson for the governor did not immediately return a request for comment after the memo was rescinded.
Beshear, a Democrat serving his second term as governor, started Wednesday morning by criticizing the federal funding freeze in a social media video he shared on his walk to the Kentucky Capitol hours before the Trump administration canceled the memo.
Beshear said that “for much of the day” Tuesday Kentucky was shut out of the Medicaid system. Multiple state Medicaid programs reported being unable on Tuesday to access a web portal that handles federal payments.
“Without Medicaid, our rural hospitals would shut down and so many health care workers would lose their job,” Beshear said. “We saw changes in our Appalachian Regional Commission account — money that goes directly into creating jobs and providing better health care and providing infrastructure in Appalachia.”
Beshear compared the situation to when former Republican Gov. Matt Bevin ordered funding cuts for Kentucky universities. Beshear was then attorney general and filed the lawsuit against Bevin.
“I took him to the (state) Supreme Court and we beat him,” Beshear said. “Why? Because in the separation of powers, Congress, and/or our state legislature appropriates the dollars and they’ve got to be used for what they were appropriated for.”
Beshear added that he would be concerned any time a president, regardless of party, tried to “stop these really, really, really important funds.”
Kentucky Lantern is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Kentucky Lantern maintains editorial independence. Contact Editor Jamie Lucke for questions: info@kentuckylantern.com.
McKenna Horsley covers state politics for the Kentucky Lantern. She previously worked for newspapers in Huntington, West Virginia, and Frankfort, Kentucky. She is from northeastern Kentucky.
