Ulster Comptroller Says Proposed Federal Grant Rule Could Put Millions in Local Funding at Risk

A proposed change to federal grant regulations could jeopardize more than $50 million in current and future funding for Ulster County programs, according to County Comptroller March Gallagher, who is urging Congress to push back against the proposal before it takes effect.

The rule, under consideration by the White House Office of Management and Budget, would revise the federal Uniform Guidance, the regulations that govern how federal grants are awarded and administered. Gallagher says the changes would give the federal government broader authority to terminate grants, impose new compliance requirements on local governments and nonprofits, and create uncertainty for federally funded programs across the country.

Gallagher said the proposal could affect everything from health and human services to transportation, emergency management and public health.

“This just provides so much flexibility and discretion to the federal government to cancel these grants and funding streams that it really puts us in a difficult position,” Gallagher said.

Among the proposed changes is expanded authority for federal officials to terminate grants after they have been awarded. Gallagher said counties could lose funding for projects already underway if federal officials determine recipients have failed to meet newly established conditions.

The proposal also would require counties that distribute federal funds to nonprofit organizations and other partners to monitor those subrecipients more closely. Gallagher said counties could be held responsible for actions or statements made by organizations they fund.

“I can’t oversee and monitor every subrecipient’s social media feed,” she said.

Gallagher also raised concerns about language requiring grant recipients to avoid actions that could “significantly damage the reputation” of the federal government or awarding agencies, saying the standard is too vague to administer.

Another provision would apply viewpoint neutrality requirements to facilities supported by federal funding, even if federal dollars are not paying for a particular event held there. Gallagher said that could create uncertainty for county-owned venues such as parks and the Ulster County Fairgrounds.

Ulster County receives and administers approximately $50 million in federal funding annually, Gallagher said. Much of that money supports health and human services, including Temporary Assistance for Needy Families, foster care, Medicare enrollment assistance and services for older adults. Federal dollars also support transportation projects, public health programs and emergency management initiatives.

Gallagher emphasized she is not predicting the county will lose all of its federal funding.

“I’m saying each piece of this federal funding is now at risk because of these changes,” she said.

She also expressed concern that the proposal could make it easier for the federal government to reclaim previously awarded funds through new cost disallowance provisions, though she acknowledged such actions would likely face legal challenges.

Gallagher said she learned of the proposed rule through the National Association of Counties, which has warned local governments across the country about its potential impacts.

“It’s not just blue counties and it’s not just New York counties,” she said. “It’s everywhere.”

The public comment period on the proposal has ended. Gallagher said she requested an extension to allow more local governments, nonprofits and businesses to weigh in but does not expect the comment period to reopen.

She said the focus now shifts to Congress.

“I really urge people to reach out to their congressional representatives and let them know this is a huge concern,” Gallagher said.

The Office of Management and Budget has not announced when it will issue a final rule. Gallagher said she believes the changes could take effect before the end of the year if they are adopted.

Image: Office of Management and Budget Director Russell Vought testifies during a House Appropriations subcommittee hearing on Capitol Hill, Tuesday, June 30, 2026, in Washington. (AP Photo/Mariam Zuhaib)