New Jersey Bill Would Allow State to Withhold Payments to Federal Government
Democratic lawmakers say the measure would let New Jersey respond if federal funds owed to the state are withheld despite court rulings.
Trenton, NJ – New Jersey’s financial, cultural, political and legal war against President Trump continues this week as a new law seeks to penalize the federal government for withholding funds at the direction of the Trump administration. A new bill introduced in the New Jersey Legislature would allow the state to withhold payments to the federal government if federal officials fail to send funds owed to New Jersey in violation of a court order.
Assembly Bill A4001, sponsored by Assemblywoman Katie Brennan and Assemblyman Chigozie Onyema, outlines a process that would allow the state to temporarily hold back certain payments if the federal government does not comply with court decisions requiring payments to the state.
Katie Brennan was the Phil Murphy staffer who sued the former governor over a campaign rape allegation and later settled her case for $1,000,000.
Key Points
• New Jersey bill would allow withholding payments to the federal government
• Action would apply if federal funds owed to the state are withheld despite court rulings
• State agencies would be required to report federal funds owed and expected payments
Bill outlines reporting requirements
Under the proposed legislation, every state agency would be required to submit monthly reports to the State Treasurer.
Those reports would list any federal funds owed to the agency that have not been paid despite a court order. Agencies would also report any payments the state expects to make to the federal government during the following 12 months.
Examples listed in the bill include employer taxes, federal employment taxes withheld by the state, federal debt offsets and grant repayments.
Governor could authorize withholding funds
If the reports show that the federal government has failed to pay funds owed to the state in violation of a court ruling, the governor could direct the State Treasurer to withhold payments to the federal government.
The withheld amount would be limited to the value of the unpaid federal funds identified in the report.
Under the bill, the money would be held in reserve and could later be transferred to the state’s General Fund at the end of the fiscal year if the dispute remains unresolved.
Bill aimed at enforcing court rulings
Supporters say the measure is intended to give the state a mechanism to respond if federal agencies fail to comply with court decisions requiring payments to New Jersey.
The legislation has been pre-filed for consideration in the 2026–2027 legislative session and has not yet advanced through committee.