President Donald Trump is reportedly considering ways to pull more federal funding from the State of California, as Gov. Gavin Newsom (D) continues to defy White House policies, despite needing money.

California is suffering a large budget deficit for the second year in a row, with the state’s Medicaid program borrowing money to stay afloat. Newsom has also asked the federal government for $40 billion in fire relief.

But Newsom is also enthusiastically suing the Trump administration over many of its policies, often seeking the kinds of nationwide injunctions that would stop those policies everywhere, not just in California.

The Trump administration is preparing to cancel a large swath of federal funding for California, an effort that could begin as soon as Friday, according to multiple sources.

Agencies are being told to start identifying grants the administration can withhold from California. Sources said the administration is specifically considering a full termination of federal grant funding for the University of California and California State University systems.

“No taxpayer should be forced to fund the demise of our country,” White House spokesman Kush Desai said in a statement Friday afternoon, criticizing California for its energy, immigration and other policies. “No final decisions, however, on any potential future action by the Administration have been made, and any discussion suggesting otherwise should be considered pure speculation.”

Trump had already threatened California’s federal sports funding after the state defied a federal transgender policy that bars biological males from competing in girls’ sports. And this week, the U.S. Department of Transportation suggested the administration could claw back billions of dollars in federal spending wasted on the state’s troubled high-speed rail project.

But Democrats have argued that California should be allowed to oppose federal policies while benefiting from federal spending, especially given the state’s large contributions to federal revenues. And they have pushed back against the idea of conditioning fire aid on policy changes.

Trump has shown, in the administration’s ongoing fight with Harvard University, that he is willing to track down any and all federal funding and to pull it from recipients who defy his administration’s policies.