By: Ariella Haviv

New York Republicans are sounding the alarm over what they’re calling a covertly created $10 million “slush fund” tucked inside the state’s new budget — a pool of taxpayer dollars they fear could be used to bankroll Attorney General Letitia James’ legal defense as she faces a mounting federal investigation. In a scathing letter to State Comptroller Thomas DiNapoli, obtained by The New York Post, the entire Senate Republican conference urged him to block any attempt to tap into the fund.

The provision, quietly slipped into the 2026 fiscal budget by Albany Democrats, allows certain state officials to use the fund to cover legal costs — even for investigations unrelated to their government duties. While James is not named directly in the letter, The New York Post report on Wednesday makes clear that the veiled reference points directly at her, as she braces for a possible criminal case tied to real estate dealings that are now under federal scrutiny.

“This proposed use of public money is a gross misuse of taxpayer dollars,” the Republicans wrote. “It undermines public trust in government and sends a troubling message that elected officials and state employees are entitled to a publicly-funded legal defense, even for matters entirely disconnected from their public responsibilities.”

The GOP letter pointedly echoes James’ own words from her high-profile prosecution of Donald Trump: “As someone once said, no one is above the law.”

The controversy comes amid reports — detailed by The New York Post — that James is under investigation by the FBI and the U.S. Attorney’s Office in Albany for allegedly falsifying information to secure loans on two properties: a Virginia home she purchased in 2023 and a Brooklyn brownstone she’s owned since 2001. The probe, led by Northern District U.S. Attorney John Sarcone III — a known Trump ally — was reportedly triggered by a criminal referral from Federal Housing Finance Agency Director William Pulte.

Despite the cloud of suspicion, James has mounted a vigorous defense, calling the allegations “meritless” and part of a political “revenge tour” orchestrated by the former president in the aftermath of her successful $454 million civil judgment against him and the Trump Organization. The New York Post report indicated that her attorney, the high-powered Washington litigator Abbe David Lowell — who also represented Hunter Biden — has painted the investigation as a partisan abuse of federal power.

But what’s sparking the ire of Republicans now is not just the probe itself, but how James plans to fund her legal fight. The New York Post reported that Lowell is being paid through the Attorney General’s office — not personally retained by James — meaning that taxpayers will foot the bill. Moreover, James plans to rely on both public funds and a private legal defense fund to mount her response.

The $10 million earmarked by the legislature, according to the information provided in The New York Post report, would be available to cover “reasonable attorneys’ fees and expenses” for state employees who claim they are victims of “discriminatory or retaliatory treatment” by the federal government — language that conveniently dovetails with James’ own legal strategy.

Though DiNapoli would have to approve any disbursements from the fund, Senate Republicans are urging him to slam the door shut before a single taxpayer dollar is spent. As the report in The New York Post noted, a spokesperson for DiNapoli confirmed receipt of the letter but declined to elaborate further.

Meanwhile, James’ office has deflected direct inquiries to Lowell’s prior statements, in which he claimed the investigation smacks of political payback. “This appears to be the political retribution President Trump threatened to exact that [Attorney General Pam] Bondi assured the Senate would not occur on her watch,” Lowell told The New York Post last week.

But critics aren’t buying it. They see the legal defense fund as a glaring conflict of interest and a dangerous precedent — one that allows powerful public officials to reach into taxpayer coffers to shield themselves from personal legal jeopardy, all while cloaked in claims of partisan persecution.

As reports on the brewing political and legal firestorm indicate, it’s clear that Letitia James’ once-towering reputation as the Trump-slayer may now face a formidable test of its own — this time with her own conduct under the microscope and her legal bills in the hands of the very public she claims to serve.