At the end of January, a memo from the White House ordered a pause on trillions of dollars of federal grants and programs nationwide.

Vital federal dollars seemingly were set to disappear overnight — including millions of dollars that pay for Kansas City transportation projects, energy infrastructure and homeowner assistance.

Two weeks later, that memo has been rescinded, then blocked by a federal judge — at least temporarily averting fiscal tremors for local governments across the country.

Now, Kansas City is preparing its budget for the next fiscal year. And though the immediate threat of losing federal grants has been avoided, uncertainty about federal spending lingers.

But City Hall isn’t too nervous.

“The strength in current financial position places Kansas City in a position unlike many peer cities currently facing layoffs, hiring freezes, and reductions of services,” wrote Mayor Quinton Lucas and City Manager Brian Platt in this budget’s transmittal letter.

How much of Kansas City’s budget is federally funded?

Only a small portion of Kansas City’s proposed $2.5 billion budget for the next fiscal year comes from federal grants. That’s the main pot of money in Kansas City’s budget that could be threatened by cuts to federal funding.

Grants — including money from both Missouri and the federal government — account for $66 million, or about 2.8%, of city revenue in the proposed budget. 

Most of those federal grants pay for housing development and rehabilitation, neighborhood cleanups, homeless shelters and senior centers.

However, that grant total is likely an underestimate for the next fiscal year. The city’s budget doesn’t include most of the grants that the Kansas City Council may vote to approve over the next year. 

For reference, two years ago federal and state grants ultimately totaled $104 million.

By way of comparison, that number may be higher in St. Louis. A member of Mayor Tishaura Jones’ staff estimated around $160 million could be at risk.

The good news is that the vast majority of Kansas City’s essential services — such as the fire department, public transit, water and police — are funded by the other 97% of revenue that is safe from federal interference.

“If you look at Kansas City’s budget, we often talk about ‘a third, a third, a third,’” said Krista Morrison, the city’s budget officer, during the budget presentation.

Roughly one-third of the city’s budget is paid for from the general fund. That’s money that the city gets from taxes on property, income and sales, and it can be used for a variety of purposes.

Another third comes from “business-type activities” — like water services and the airport. Those services are self-funding. For example, when you pay a water bill, that money can only be used by KC Water. None of that bucket is funded by the federal grants.

The third category is called “special revenue funds.” That’s where most of the grant money lives.

Special revenue includes money that has been earmarked for a specific purpose. For example, the transit sales tax has to go to the transit agency for bus service, and housing grants have to be used for housing.

City Councilmember Andrea Bough, who represents the 6th District at large and heads the council’s finance committee, said that Kansas City’s wide range of funding sources makes the city more secure amid financial uncertainty.

“The reality is that no one knows what changes, if any, could occur,” Bough said in an email. “Our focus is on ensuring that Kansas Citians continue to receive the high level of service they expect, through a balanced and resilient approach to funding.”

What happens if that money disappears?

Former Kansas City Manager Bob Collins said that during his tenure from 1997 to 2003, the city very rarely spent money that it hadn’t already received from the federal government.

That means that if federal funding were suspended or cut, the city would have to pause future projects. But it wouldn’t be left carrying the bill for projects it was expecting the federal government to support.

“I can’t say they never have,” he said, “but they can’t spend it unless they appropriate it. And they can’t appropriate it unless the money is there.”

The exception is for police — some police grants pay for salaries for officers, which means that if those grants were to disappear, the department would have to either pay for those positions from another fund or lay off staff.

The threats to federal funding that Kansas City is facing under the Trump administration are unlike anything Collins experienced during his six years as city manager.

When the presidency changed hands in the past, it wasn’t uncommon for certain priorities to change, which affected the amount of money Kansas City received for things like community development block grants.

Those grants pay for blight removal, weatherization, affordable housing and senior centers.

The difference is that in the past, City Hall usually had much more lead time to plan ahead.

When President Donald Trump attempted to freeze federal spending at the end of January, he gave grant recipients just one business day to figure out what to do and whether they were included in the freeze.

The White House memo said offices that oversee those grants would be allowed to resume those grants once the budget office determined that they were compatible with Trump’s executive orders regarding “DEI, woke gender ideology and the green new deal.”

The federal grant funding freeze has been rescinded, but Elon Musk’s so-called Department of Government Efficiency has continued to target foreign aid, medical research grants and the Department of Education.

“In this case, they don’t know whether it’s going to come or not,” Collins said. “And they don’t know where it’s going to be reduced or if it’s going to be reduced. And so every city and every state in the country is trying to figure out what in the world to do.”

How to participate in the budget process

Kansas City is hosting budget hearings over the next few weeks to get feedback on the spending plans.

During that time, City Council members or the mayor may submit amendments to the budget. The final budget must be approved by the council by March 20.

Upcoming Budget Hearings

If Kansas Citians are unable to make it to the meetings, City Hall encourages them to submit feedback online.