The Obama administration is weighing the decision to curb federal aid to North Carolina after the state passed a new law which states that people can only use bathrooms in conformity with the sex listed on their birth certificates. The federal funding that the state receives contributes to funding schools, highways, and housing.
The White House is not involved yet, but federal agencies including the Department of Housing and Urban Development, the Department of Transportation, and the Department of Education are reviewing the North Carolina law to assess whether it is discriminatory.
Governor Pat McCrory had recently passed a law that says that people cannot use bathrooms of the other sex, and makes no exception for transgender individuals.
The secretary of transportation Anthony Foxx had first suggested that North Carolina's federal funding could be reviewed in the wake of the passage of its new law. It provides about $1 billion in aid to the state annually.
The Department of Housing and Urban Development spokesperson Cameron French also said that they are evaluating the possibility of cutting funding to the state. "We're reviewing the effects of the law on HUD funding allocated for North Carolina," French said.
Dorie Nolt, spokeswoman for the Department of Education, said that the North Carolina law was under review "to determine any potential impact on the state's federal education funding."
Over 90 companies including Facebook, Google, and Apple, have expressed their displeasure over the law which they call discriminatory.
White House Press Secretary Josh Earnest said that he was not surprised that businesses have spoken out against the law.
"The state of North Carolina has an economy that has benefitted significantly from what officials in that state proudly describe as a hospitable business environment," he said. "Passage of laws like this do not create a hospitable business environment, particularly if businesses are concerned that either their employees or their customers are not going to be treated fairly by the state, or are going to be singled out by the state."
However, the North Carolina government stood firm on its stand that the new law promotes safety and privacy of genders in bathrooms.
"There's no doubt there is a well-coordinated, national campaign to smear our state's reputation after we passed a common-sense law to ensure no government can take away our basic expectations of privacy in bathrooms, locker rooms and showers," said Josh Ellis, communications director for McCrory.
If federal aid to the state is cut off, North Carolina may face an increased pressure to strike down the law, else it could face a budget crisis and a major disruption in public services.
