PROVIDENCE – Gov. Daniel J. McKee on Monday urged Rhode Island's small-business owners to stay the course and strategize amid the current
federal funding freeze impacting both the state and the nation.
McKee and members of his administration spoke with leaders from the state's small-business community during a roundtable event at the Greater Providence Chamber of Commerce, with most in attendance agitated over recent political developments.
Dozens of small businesses and owners, spanning from nonprofits to startups, expressed frustration on Monday over the ongoing uncertainty regarding access to federal grants and funds.
"People and small businesses don't really know what's happening right now," McKee said of President Donald J. Trump's funding freeze. "Whatever comes out of this [federal funding confusion] will be short-term. It will not be long-term. But we have to make this more than a state or regional effort."
"Rhode Island doesn't have that much pull in Washington, D.C., right now," Lt. Gov. Sabina Matos said. "We need to find who our Republican allies are [against the funding freeze] and work with them."
McKee says that three weeks ago, he had a "different perspective" of the national political landscape, saying he believed everything was moving in the right direction.
"But in the last few weeks, I've had some concerns. Rhode Island needs to stay the course on what we've already planned for [funding-wise]. We also have to continue strategizing about what the current administration is doing," McKee said.
McKee acknowledged that he has never seen a situation like this in more than 30 years of public service, noting that even the COVID-19 pandemic was "manageable" in comparison.
Trump did rescind his initial Jan. 27 memo declaring the funding freeze, and two federal judges, one of which is in Rhode Island, temporarily blocked it last week. However, the Trump administration has since only provided vague and incomplete answers on funding since then, leaving
lawmakers, public officials, government agencies, nonprofits and small businesses wondering what will come next. Even temporary interruptions in funding could cause widespread layoffs or delays in the public sector for the Ocean State and beyond.
"[Former President] Biden cared about Rhode Island. He cared about smaller states. And right now, blue states are the only ones pushing back [against Trump's actions]," McKee said. "We have to find those red allies and work with them."
Meanwhile, McKee described Rhode Island as the nation's "backdrop" for the ongoing pause on federal aid, with Rhode Island's U.S. District Court Chief Judge John J. McConnell Jr. presiding over one of many federal lawsuits against the White House.
On Monday afternoon, McConnell once again ordered the administration to disburse money that was previously withheld and end the funding freeze, ruling that the administration failed to comply with the court order to unfreeze it.
“The broad categorical and sweeping freeze of federal funds is, as the Court found, likely unconstitutional and has caused and continues to cause irreparable harm to a vast portion of this country,” McConnell wrote in Monday’s decision. “These pauses in funding violate the plain text of the [temporary restraining order].”
Rhode Island also was one of the states to join a lawsuit against the administration. R.I. Attorney General Peter F. Neronha and Mass. Attorney General Andrea Campbell on Jan. 28 joined a group of attorneys general led by N.Y. Attorney General Letitia James challenging Trump’s funding freeze.
A total of 22 states, as well as the District of Columbia, have filed similar legal proceedings since then.
A preliminary injunction hearing against the funding freeze will be argued in a Providence federal court on Feb. 21.
(UPDATE: Adds judge ruling Monday for Trump administration to disperse money held during funding freeze 11th and 12th paragraphs)
Matthew McNulty is a PBN staff writer. He can be reached McNulty@PBN.com or on X at @MattMcNultyNYC.
