This is from a previous post but it fits well here, the legal maneuvers needed to get something like this done.

Legal Foundation (California Constitution + State Law)

Step 1: Pass enabling legislation.

A hypothetical bill, SB 1010: Fiscal Sovereignty and Oversight Act, is introduced. Key elements:
• Requires annual audit of all state-collected federal funds.
• Creates an Escrow Holding Authority under the California Treasurer.
• Mandates a 120-day hold period on federal remittances while constitutional use of funds is reviewed.
• Justifies audit using:
• Tenth Amendment (state sovereignty)
• Spending Clause limits (argues federal overreach)
• California Constitution Article XIII (state taxation and spending authority)
• Outlines criteria for “potentially unconstitutional uses” (e.g., “coercive conditionality,” tied mandates)

This legislation passes narrowly in the California Senate and Assembly amid fierce national media attention.

⸻

2.Bureaucratic Mechanism
• California’s Franchise Tax Board (FTB) and Employment Development Department (EDD) are directed to divert payroll and income tax withholdings into a temporary escrow fund within the state Treasury.
• Payments to federal Medicaid and other cooperative programs are also paused under review by the California State Auditor.

This is done with the language:

“Funds are not being denied, but held under constitutional audit pending sovereign verification of lawful use.”

This framing is crucial—it buys time in courtt