“We’re going to defend all of our people regardless of where they come from, regardless of their immigration status,” Mayor Bill de Blasio of New York said at a news conference with other city officials.It's part of American federalism that state and local governments set their own agenda and perform their separate functions in their separate ways. Immigration is a matter that belongs to the federal government, but it can't force state and local government to do the work it wants done.
In Chicago, Mayor Rahm Emanuel declared: “I want to be clear: We’re going to stay a sanctuary city. There is no stranger among us. Whether you’re from Poland or Pakistan, whether you’re from Ireland or India or Israel and whether you’re from Mexico or Moldova, where my grandfather came from, you are welcome in Chicago as you pursue the American dream.”
When cities are doing their own work, they don't have to load in tasks assigned by the federal government. They can choose to do so, and they can be tempted to make that choice by conditions imposed on federal spending, but those conditions need to be made clear at the point when the money is offered, so that they do have a choice.
That's the protection for federalism that the Supreme Court has built into its doctrine about the Congress's spending power. Congress is trusted to take account of the interests of state and local government when it attaches conditions to spending, which is why it has to make the conditions clear. You can't sneak up on the local government and trick it into a position where it later figures out the autonomy it has lost.
So I don't see how President Trump can go looking for spending to withdraw to bully local government officials into caving into his new policy agenda. That's not how American federalism in the present-day constitutional law doctrine works, and it's certainly nothing close to what someone who cares about the original understanding of federalism would think proper.
* Is Madison, Wisconsin a "sanctuary city"? No, but the mayor likes to say it is!