Alliance Alert: New York is already beginning to feel the burden of massive federal cuts. This week, state agencies and service providers were blindsided by the sudden termination of over $300 million in federal funding meant to support mental health, substance use, and public health services.
This includes cuts to programs operated by the Office of Mental Health (OMH), Office of Addiction Services and Supports (OASAS), and the State Department of Health (DOH)—funding that communities across New York were counting on to fight the overdose crisis, respond to mental health needs, and maintain essential services for our most vulnerable residents.
What makes this more devastating is that these cuts were unexpected and immediate. Providers had built budgets and hired staff based on this funding. Now, they are being told that expenses incurred after March 24 will not be reimbursed, threatening service disruptions, layoffs, and irreparable harm to people in recovery and those in crisis.
State lawmakers have begun to push back. Proposals to withhold federal tax payments and calls for legal action reflect just how serious this moment is. But while these battles play out, New York must do everything it can to protect the people who will suffer most from this reckless move by the federal government.
That means:
- Ensuring continuity of services through emergency state funding where needed.
- Refusing to let partisan federal politics dismantle public health and recovery systems that New Yorkers rely on.
- Prioritizing core health and safety services in budget negotiations and beyond.
Let’s be clear: these cuts are not just numbers—they represent lives. They will worsen the mental health crisis, deepen the overdose epidemic, and unravel progress we’ve fought to make in building up community-based services.
New York must step up to protect its people. That means standing up to these federal attacks and finding ways to safeguard the services that help New Yorkers survive and recover.
We will continue to monitor developments and share opportunities to advocate, act, and hold our leaders accountable. See below for more.
Statement From Governor Kathy Hochul on Sweeping Federal Cuts to Public Health, Mental Health, and Addiction Services
Office of NYS Governor Hochul | March 26, 2025
“Yesterday, the federal Department of Health and Human Services notified our Administration that they intend to cut more than $300 million in funding for the New York State Department of Health, Office of Addiction Supports and Services, and Office of Mental Health. These include funds that county health departments across New York are planning to use to fight disease and keep people safe. At a time when New York is facing an ongoing opioid epidemic, multiple confirmed cases of measles and an ongoing mental health crisis, these cuts will be devastating.
“Make no mistake: there is no State in this country that has the financial resources to backfill the massive federal funding cuts proposed by DOGE and Congressional Republicans. They are trying to rip apart the social safety net that lifts families out of poverty and gives everyone a shot at a middle-class life. These cuts aren’t just numbers on a page – they’re going to hurt real people in every corner of New York.
“For every attempt they make to withhold this funding, we will fight them tooth and nail. I’ll do everything in my power to protect the health and well-being of New Yorkers.”
Feds Suddenly Terminate Funding for NY Addiction Recovery Programs
By Rebecca Lewis | City and State New York | March 26, 2025
Addiction recovery service providers were left in the lurch on Tuesday after two state agencies informed them that the federal government had terminated grant funding meant to last through September. Now, they’re asking the state to include funding in the state budget that will fill that gap, as New York suffers one of the first of what will likely be many potential cuts in federal funding.
Both the state Office of Mental Health and Office of Addiction Services and Support, known as OASAS, have had access to pots of money from the federal government to help respond to the COVID-19 pandemic. Those revenue streams were approved as part of the COVID Response and Relief American Rescue Plan Act of 2020 and the American Rescue Plan Act of 2021, with access to the dollars extended until September 2025 under the Biden administration. The feds provided the Office of Mental Health $129 million and OASAS $198 million to work with, when all the available grant allocations to agencies and partner providers were put together, according to advocates.
But on Monday, both state agencies received notice from the federal government that it had prematurely terminated access to those funds. In turn, the agencies alerted providers on Tuesday that they will not get reimbursed for any further spending. “New York State OMH cannot reimburse or recognize any expenses incurred after March 24, 2025, for these grants as a result of termination,” reads a letter sent to providers on Tuesday. OASAS held a virtual town hall with service providers on Tuesday as well. In presentation slides from that meeting shared with City & State, the agency blamed the federal Department of Government Efficiency for the cuts, which it called “unexpected and concerning,” and said its staff was looking at ways to “mitigate the damage caused by this action.”
Chris Assini, policy director for Friends of Recovery New York, called the virtual town hall “somber” and warned that the surprise termination of funds could cause devastating disruptions in the continuity of care for those recovering from addiction. He is bracing himself for even further cuts. “This is just the first step,” Assini said. “It is ultimately going to get worse.”
Addiction services organizations working with OASAS and the Office of Mental Health expected to rely on these federal grant dollars for several more months and had budgeted accordingly. The state had already begun taking steps to continue to fund services when the federal money ran out later this year, but the surprise early termination – which providers contend is illegal – has officials scrambling to figure out how to ensure that care doesn’t get disrupted. “You’re effectively cutting off six months of planning that agencies and providers have been doing right,” said Jihoon Kim, president and CEO of InUnity Alliance. “They have staff that literally are paid through those funds.”
With the situation very much in flux, advocates and lawmakers are calling on state leaders to include money in the budget to backfill the unexpected cuts, even as they take steps to fight the federal government’s abrupt termination of the grant funds. “In moments like this, we’re reminded that government has a responsibility to protect its people, not abandon them,” said state Sen. Nathalia Fernandez, chair of the state Senate Alcoholism and Substance Use Disorders Committee. “We will not stand by while vital services are ripped away from those who need them most.” She’s calling for at least 60 days of emergency funding, but neither lawmakers nor advocates have a specific dollar amount yet of necessary funds.
After this story was published, Gov. Kathy Hochul said in a statement that the federal government had cut a total of $300 million to OASAS, the Office of Mental Health and the state Department of Health. She condemned the move but gave no indication that she would support backfilling the grant funding with state money. “Make no mistake: there is no State in this country that has the financial resources to backfill the massive federal funding cuts proposed by DOGE and Congressional Republicans,” Hochul said. However, she said she would “fight them tooth and nail” over the funding.
State leaders have so far been cagey about including remedies to potential federal cuts in the budget, though the addiction services funding cut is not “potential” and the funds were previously appropriated before the sudden termination. Asked about the cuts on Wednesday, state Senate Majority Leader Andrea Stewart-Cousins said she had conversations about the federal move, but wouldn’t commit to the idea of addressing the cuts in the budget. “We have to look at the priorities, and we’ve got to figure out what’s the best use of the finite resources that we have,” Stewart-Cousins told reporters.
Spokespeople for Gov. Kathy Hochul and the Office of Mental Health referred back to comments the governor made to reporters about potential cuts last week. “I’ve said all along, I can’t fix what they’re doing to us,” the governor said at the time. “I don’t have the resources.” She added, however, that “when they withhold money, we see you in court.” A spokesperson for OASAS did not provide a comment before publication.
A spokesperson for Assembly Speaker Carl Heastie did not return a request for comment, but Heastie told reporters on Tuesday that he would not discuss backfilling potential federal cuts. “We’ve gotten nothing direct from the feds or the Republicans as to what they would cut,” he said – which is no longer true thanks to the grant funding termination.
While substance abuse disorder service providers are ringing the alarm bell first, the COVID-related grant funding termination could have far-reaching implications for other agencies and organizations around the state and country.
NBC News first reported on Tuesday that the U.S. Department of Health and Human Services had pulled back over $11 billion in COVID-related funding to state and community health departments.
G.O.P.’s Push to Cut Federal Spending Places New York Budget in Limbo
By Benjamin Oreskes | New York Times | March 27, 2025
State leaders no longer expect to get the $91 billion in federal aid they originally anticipated, but exactly how much they will get remains unknown as they try to pass a budget.
Earlier this week, Gov. Kathy Hochul recalled experiencing a mix of confusion and dread after seeing President Trump discuss his plans to close the Department of Education.
She wondered: Would that endanger her expansion of free school lunches in New York? What would it mean for the state’s Pell Grant allocations?
“We don’t have a crystal ball that tells us the scale of the cuts,” Ms. Hochul said.
As Congress works out the particulars of how it might roll back trillions of dollars in federal spending, New York and other states have been left to play a guessing game about how they might be affected.
New York’s budget, which is due April 1 but is likely to be passed late, anticipates tens of billions of dollars in federal aid. It also includes tax revenue forecasts that predate much of the turbulence in the stock market that followed Mr. Trump’s tariff proposals.
The uncertainty over the looming federal cuts means that whatever budget deal is approved by the governor and legislative leaders may need to be altered substantially, and quickly.
It’s just hard to know where the cuts might come and how they could affect the state’s finances.
“If and when we lose federal dollars in various categories, we are going to have to completely re-evaluate sections of the budget or perhaps the whole budget,” said State Senator Liz Krueger, a Democrat who leads the Finance Committee.
“We think it’s better to move forward and know that we will have to come back and do our work again, and differently if required,” she added.
Ms. Hochul appeared resigned to that fate, telling reporters on Monday that “nothing prohibits us from coming back in a special session to deal with anything that comes our way from the federal government.”
“We’re having conversations about what cuts in education would do, what cuts in Medicaid would do,” she said, adding that voters should focus their frustration on the seven Republicans in the state’s congressional delegation.
“We also have a responsibility to put them on the spot and say, ‘What are you doing to make sure that your home state of New York is not hurt?’” she added. “But we always can come back and have another session.”
At the moment, Ms. Hochul’s negotiations with the Senate majority leader, Andrea Stewart-Cousins, and the Assembly speaker, Carl Heastie, do not account for the federal cuts.
The three leaders, all Democrats, have said that the cuts being discussed are far too vast for the state to cover. In the fiscal year ending this month, New York received an estimated $96 billion from the federal government, with roughly $57 billion going to the state’s Medicaid program. About $10 billion went to schools, about $4 billion to law enforcement and public safety and $2.5 billion to transportation programs.
Ms. Hochul had based her initial $252 billion state budget proposal for the coming year on the assumption that almost $91 billion would flow from Washington.
On Tuesday, Mr. Heastie echoed Ms. Hochul’s critique of congressional Republicans. “Why would I build a budget on something that I’m not even sure that they could follow through on?” he said.
“We’ll put forward what we think is a normal, responsible budget,” he said, “and if we have to come back, I would hope that y’all ask these questions to the Republicans: why would you pass a federal budget that gives gazillionaires another tax break but also cuts Medicaid.”
This week, the Department of Health and Human Services abruptly canceled more than $12 billion in federal grants to states. Two New York State agencies working on addiction services and mental health care told nonprofit providers that two federally funded state grant programs, which totaled about $330 million and were supposed to run through the end of September, had been halted.
Jihoon Kim, president of the InUnity Alliance, a coalition of nonprofits in New York, said that the cuts have imperiled existing programs and raised the prospect of layoffs.
“While the governor and Legislature have indicated that they do not see the need to address future federal cuts in the current budget negotiations, what’s clear is that this action by the federal government means that the future cuts are happening now,” Mr. Kim said in an email.
Jared Walczak, vice president of state projects at the Tax Foundation, a nonprofit tax policy group, said most states did not appear to be doing enough to prepare for what may come from Mr. Trump and a Republican-led Congress. New York relies heavily on income tax, he said, and dips in the stock market could affect how much money the state takes in and hurt its budget planning abilities.
“While lawmakers across the country are certainly keeping a wary eye on what’s happening in Washington, few of them seem to be fully preparing for it,” Mr. Walczak said, acknowledging that it was difficult to plan ahead without knowing what will be cut.
“Most states are going to have to react if something changes, rather than preparing for it,” he continued. “But states can be better prepared if they don’t overcommit, and if they leave some reserves and if they prioritize their rainy-day funds.”
For now, New York leaders are trying to find a middle ground on some policies Ms. Hochul has focused on, such as changes to laws around evidence in criminal trials, involuntary commitment of mentally ill people and a ban on cellphones in schools.
Those three issues, along with increasing penalties for people who commit crimes while wearing masks, are Ms. Hochul’s top policy priorities, and she hopes to include them in the budget.
On Wednesday, Ms. Stewart-Cousins said that much of conference appeared ready to accept Ms. Hochul’s proposal that the cellphone ban cover the entire school day.
Ms. Stewart-Cousins added that the cuts this week to certain mental health programs were an ominous sign of what is to come.
“It is financially impossible for us to be able to backfill every cut that our Republican colleagues allow to happen on the federal level,” she said. “So I’m hoping that they will stop it.”
G.O.P.’s Push to Cut Federal Spending Places New York Budget in Limbo – The New York Times