ST. PAUL, Minn. (GRAY) - Several state leaders gathered at the Minnesota State Capitol Building on Wednesday as the state faces a lapse in federal funding to Medicaid, USDA funds, and potentially all federal payments.
The core reason for the briefing was to provide an update on the state's Medicaid payments after the U.S. Center for Medicaid Services (CMS) indicated it would be withholding roughly $2 billion from the state amid ongoing fraud concerns.
"Because Medicaid services are essential for so many people, it's important for us to remain focused on the facts. We must avoid emotions, politics and hyperbole that can cloud the transparency the people of Minnesota deserve right now," State Medicaid Director John Connolly said.
Connolly and the state's Department of Human Services have appealed the decision to withhold Medicaid funding, adding that his team met with CMS head Mehmet Oz earlier in the day.
"I would characterize the discussion [with Oz] as productive. I think we agree on the overall aim of fighting fraud and enhancing program integrity here in Minnesota and broadly in the Medicaid program," Connolly said, acknowledging that CMS may or may not see the meeting's outcome differently.
The state also faces possible cuts to USDA funding, though the extent of such cuts is currently unclear.
Minnesota Commissioner of Agriculture Thom Peterson said the Department received a letter late last night notifying them that funding for a U of M poultry testing program was being paused.
"It's a lot of uncertainty. So I call on the Secretary to clarify which programs provide us a list, to work with us," he said.
Just hours before state leaders remarked on the situation, President Donald Trump posted a message on Truth Social, saying all states with so-called sanctuary cities in them would lose all federal payments by Feb. 1.
The immediate impact of such a threat was unclear, according to State Budget Director Ahna Minge.
"We have not received official communication, but I would just say, $1 of every $3 that the state of Minnesota spends is a federal dollar," Minge said.
She clarified that the state sends more in taxes to the federal government than it receives in funding.
Minge says the weight of the president's announcement is unclear at the moment.
"I'm not sure what pathway they would do. That would certainly be unprecedented. The closest thing that we saw would be what happened last January with the funding freeze, which was stopped [fairly quickly,]" she said.
The increased uncertainty over federal funding streams in Minnesota comes just weeks before the start of the legislative session and as Minnesota Management and Budget is working to finalize the state's February Budget Forecast.