Alaska Municipal League wants federal government to withdraw proposed grant overhaul

The Alaska Municipal League has asked the federal Office of Management and Budget to withdraw a proposed overhaul of grant regulations, warning the changes could cut off funding Alaska's 165 cities, boroughs, and unified municipalities depend on for roads, water systems, public safety, and energy resilience.

Alaska holds $11.06 billion in active federal grants across 13,805 individual awards. That's about $15,000 per Alaskan in federal money currently flowing into the state for community infrastructure and services. The proposed rule would change how that money can be terminated, monitored, and replaced.

The key changes that worry the league:

• Termination-for-convenience. Federal agencies could end any grant at will, with no appeal rights for the recipient. Communities mid-project could lose funding without recourse.

• Political appointee review. Every discretionary grant would require pre-issuance approval by a senior political appointee, making peer review purely advisory.

• No more fixed-amount awards. Most grants would shift to cost-reimbursement models, which are more administratively complex and harder for small communities to manage.

• E-Verify requirement. Recipients and subrecipients would have to use E-Verify for employees and contractors working on grant projects.

OMB says its objectives are to improve transparency, accountability, and oversight. The administration aims to finalize the rule by October 1, 2026, so it applies to all federal awards in fiscal year 2027.

The stakes extend beyond municipal government. In Alaska, government grants make up 45 percent or more of nonprofit revenue, and the state ranks among the highest nationally for nonprofits dependent on government funding.

AML, which represents every Alaska municipality, has asked OMB to either withdraw the proposal or revise it after consulting with local and tribal governments.