How New Administration’s Priorities Will Impact State, Local Government

2025 marks the start of a new federal administration, introducing shifts that influence operations across federal, state and local governments. As priorities evolve — whether through funding adjustments or regulatory changes — these developments will certainly impact state and local programs and services. This piece highlights key changes, examines their implications and shares emerging best practices to help you stay ahead.

THE NET NET

Early indicators from the new administration reveal a dual focus: shifting key responsibilities to states while simultaneously driving innovation at the federal level. These changes bring implications for funding, reporting and policy priorities as well as opportunities for state and local governments to adapt and innovate. Here are a few items that became evident to us:

• More Responsibility for States and Localities: The Trump administration plans to shift more responsibility for key issues — such as education and health — back to the states.
• Changes in Federal Funding: To improve efficiency and allocate resources more effectively, the federal government may restructure, pause or reduce certain funding streams for state and local agencies.
• Increased Federal Reporting Requirements: State and local agencies that rely on federal grants may face new impact reporting requirements and tighter competition for funding. Grant priorities could also shift toward regional impacts rather than single-agency initiatives.
• Tariff Impacts on Budgets and Supply Chains: Changes to tax codes and tariffs may affect state and local budgets as well as supply chains — particularly for specialized IT equipment.
• Technology as a Priority: The incoming administration is emphasizing technology — such as AI and cybersecurity — as a key driver of innovation.
• Increased State Legislative Activity: With more decision-making and funding responsibilities shifting to states, this legislative session is likely to be particularly active.

Initiatives to watch for in 2025 include efforts to protect Social Security, strengthen Medicare, reduce wasteful spending and increase government efficiency. Immigration reform and reimagining health and well-being will also be key priorities for this new administration. A central focus we see will also be the federal government’s push to reimagine innovation — particularly in technology and AI development — by cutting unnecessary regulations, leveraging new innovation structures (the Department of Government Efficiency, DOGE) within federal agencies and taking a bottoms-up or states-up approach to problem-solving to drive transformative changes.

EXECUTIVE ACTION RECAP

A series of new executive orders, along with reversals of existing ones, has already reshaped federal priorities and approaches which could have impacts to state and local funding streams, existing programs, mandated responsibilities and overall priorities for 2025. Below is our curation of notable new and revoked presidential actions for your reference.Notable New Presidential Actions:

1. Return to Work (Monday) — A new mandate requires federal employees to return to in-person work. While the immediate impact on state and local governments is unclear, this move may prompt similar policies and necessitate adjustments to workplace strategies. Read more.
2. Establishment of DOGE (Monday) — Repositioning U.S. Digital Service as DOGE with a new operating structure to engage each federal agency. Read more.

Notable Revoked Presidential Actions:

1. Infrastructure Investment and Jobs Act Implementation (Executive Order 14052) — Immediate freeze and restructuring of $1.2 trillion in federal infrastructure funding has put numerous transportation, energy, water and broadband projects on hold, creating uncertainty for long-term planning.
2. Medicaid/Affordable Care Act (EO 14009) — Changes to Medicaid requirements and funding could affect health-care delivery for vulnerable populations at the state level.
3. Inflation Reduction Act Implementation (EO 14082) — The rollback of federal incentives and funding for clean energy initiatives has stalled state and local climate efforts reliant on these programs.
4. AI Safety (EO 14110) — Rescinded AI risk management guidelines, leaving state and local governments to create their own frameworks.
5. Immigration Enforcement (EO 13993) — Changes to federal-local cooperation on immigration enforcement are expected to increase resource demands on local law enforcement and social services.
6. Policing Practices (EO 14074) — Rescinding federal funding and requirements for law enforcement reform will likely slow progress on modernization and accountability measures.
7. Climate Crisis (EO 14008) — State and local climate resilience plans will need re-evaluation following the withdrawal of federal support.
8. Education Equity (EOs 14045/14049/14050) — The removal of federal mandates and funding for equity in education challenges local efforts to address disparities.

WHAT IT MEANS FOR STATE AND LOCAL

We’ll be unpacking the implications of these federal actions on a complementary webinar to be held on Jan. 23. Register to attendhere. Following the webinar, we will update this article with our takeaways.

GO DEEPER