Feds to States: Help ICE or Lose Millions in Transit Funds

What Happened

In a major policy announcement, Transportation Secretary Sean Duffy has declared that any state or local government refusing to cooperate with U.S. Immigration and Customs Enforcement (ICE) will lose federal transportation funding. Any city or state declining to assist ICE with immigration enforcement, including sanctuary cities that limit collaboration, now risks forfeiting millions, even billions, in federal infrastructure grants.

The policy is part of a bigger effort by the Trump administration to tie federal dollars to ideological and legal compliance. The administration is also pressuring transit agencies to abandon race- or gender-based diversity hiring practices. Instead, it wants a return to stricter and more traditional merit-based systems.

The announcement immediately set off alarm bells in statehouses across the country. It has added fuel to ongoing legal fights over federal funding and immigration.

The policy isn’t coming out of nowhere. Back in April, the Department of Transportation quietly issued letters warning that federal transit funds could be withheld from states that refuse to work with ICE or rely on DEI-based hiring. This triggered immediate backlash and by mid-May, 20  Democratic-led states had filed lawsuits calling the move unconstitutional. 

Their argument revolves around funding decisions, which they believe are the constitutional responsibility of Congress, not the White House. The suits accuse the administration of using federal dollars as political leverage to force compliance on deeply divisive issues.

Why It Matters

Billions in federal transit funds help keep subways running, highways maintained, and infrastructure projects moving forward. If the administration follows through, states that reject ICE cooperation or maintain DEI-based hiring policies could see major projects stalled or canceled.

This includes bridge repairs, road expansions, and transit overhauls that serve millions of Americans.

Beyond logistics, the legal and political stakes are enormous, as it sets a precedent over the amount of control Washington can exert over state and local governments. Supposing the courts uphold the administration’s authority to cut funding, it would open the door to similar policy-based conditions being tied to other federal grants.

But if the states win, it would limit the power of future presidents to use funding as a form of policy enforcement.

These ongoing legal battles are redefining the federal government’s stance on immigration enforcement. Rather than relying solely on ICE officers, the administration is trying to compel state and local cooperation. Tying money to immigration policy is a pressure tactic aimed at breaking that resistance.

How It Affects Readers

For individuals living in states that are at odds with federal immigration enforcement such as California, New York, Illinois, or Massachusetts, this isn’t a minor budget or dispute. It could mean your morning train runs less often, the new light rail project your city promised gets shelved, or that long-awaited highway expansion turns into a years-long delay.

Federal transit dollars help keep basic services running. Once that funding disappears cities and states will have two options: slash service or raise taxes.

For example, if your city planned to modernize its bus fleet with electric vehicles or break ground on a new commuter rail line, those plans could stall. Smaller cities without deep tax bases will be hit even harder. For working people, this could translate to longer commutes, fewer job opportunities, and more strain on overburdened systems.

The outcome of these legal disputes will help define how far Washington can go in shaping local law through money. If the courts back the administration, you can expect more policy strings attached to future funding. If the states win, the balance of power may shift back into their favor.