\n<\/p>\n
This fall, Americans got to see what it\u2019s like to go without a safety net for the hungry. With the U.S. government shut down for multiple weeks and President Donald Trump refusing to fund SNAP, the federal food stamp program, a panic set in among the more than 40 million people who rely on it. Families skipped meals, and babies went unfed. Food banks ran out of food, and some people turned to dumpster diving.<\/p>\n
It was just a glimpse of what\u2019s to come. Starting next October, Trump\u2019s so-called One Big Beautiful Bill Act will shift billions in SNAP costs from the federal government onto states. Some states won\u2019t be able to afford this, and they could be forced to deeply cut or even shutter their SNAP programs altogether, according to the Congressional Budget Office.<\/p>\n
\u201cTo be crystal clear, what this bill did was create the potential for SNAP programs to no longer exist \u2026 in states that cannot afford to?\u201d Rep. Shomari Figures, an Alabama Democrat, asked a panel of state and county social services officials during a congressional hearing in September. Is it correct that under the new cost-sharing arrangement, Figures continued, these states might not have it in their budgets to feed anyone at all, including children and homeless veterans?<\/p>\n
\u201cYes,\u201d officials from Ohio to Wyoming answered, one by one by one.<\/p>\n
Most vulnerable to this outcome are 26 states that have enacted sweeping corporate and personal income tax cuts over the past five years, depriving them of billions of dollars in revenue that they could have used at just this sort of moment. These state-level tax cuts, disproportionately benefiting the rich, have moved through legislatures with backing from powerful conservative organizations including the American Legislative Exchange Council, or ALEC, and the Koch brothers-founded Americans for Prosperity, as well as the Tax Foundation, a think tank. These groups seized on an opportunity created by the pandemic \u2014 states were flush with cash from 2021 to 2023 largely because federal stimulus funding was flooding in \u2014 to make significant progress toward the long-term goal of eliminating state income taxes entirely.<\/p>\n
States that slashed their own taxes have only made themselves more reliant on federal funding, and thus stand to be disproportionately harmed by the cuts to SNAP and also to Medicaid contained in the Trump legislation, budget experts and state legislators said.<\/p>\n
\u201cIt\u2019s clear to policymakers across the country that there will be added costs coming down to states due to the Republican megabill,\u201d said Wesley Tharpe, senior adviser for state tax policy at the nonpartisan Center on Budget and Policy Priorities. \u201cBut what\u2019s less well understood by the public is that state and local budgets were already facing extreme strain due to the scope and scale of the tax cut wave that has been sweeping the nation.\u201d<\/p>\n
\u201cThere have been prior waves,\u201d Tharpe added, \u201cbut the number of states that have cut taxes in the last five years, and the sheer size of the cuts, is nearly unprecedentedly large.\u201d<\/p>\n
Indeed, according to Pew, the scale of the recent downturn in states\u2019 tax revenue resembles what is usually seen during a recession \u2014 even though the U.S. is not in a recession.<\/p>\n
Dave Rader, a state senator in Oklahoma who chairs that chamber\u2019s Republican caucus as well as its revenue and taxation committee, told ProPublica that as the costs of SNAP and Medicaid are shifted onto states by the new federal law, those programs could have to be \u201celiminated\u201d if he and his fellow lawmakers can\u2019t find a way to pay for them. And his colleagues\u2019 recent decision to set Oklahoma on what has been called a \u201cpath to zero\u201d income taxes will \u201cput us in an even less fortunate situation because of the decline in revenue,\u201d Rader said, adding that he still hopes the tax cuts work out.<\/p>\n
According to a ProPublica analysis of state tax trends since 2021, 26 states have lowered their income taxes, with 23 of them cutting their top marginal rate, which most benefits their wealthiest residents. Eight of these states did so while adopting a \u201cflat\u201d income tax \u2014 meaning that a billionaire and his janitor will pay the same rate. Many states, meanwhile, have slashed other kinds of taxes, including property taxes. North Carolina is eliminating its corporate income tax. Missouri is even exempting passive income (money made on stocks, real estate, cryptocurrency and the like) from taxation, which will give millionaires there a $43,000 tax break on average compared with just $80 for everybody else.<\/p>\n
These deep cuts to states\u2019 main revenue streams didn\u2019t hurt too much when stimulus dollars were still flowing in from the first Trump and Biden administrations \u2014 which, along with high inflation and the temporary spike in sales tax revenue it created, juiced state budgets and budget forecasts. But state lawmakers might have easily foreseen that federal funding pegged to the pandemic would eventually dry up.<\/p>\n
Still, they kept cutting taxes, sometimes repeatedly, and now, several states are already facing severe shortfalls. Arizona, which in 2021 enacted an extremely low flat tax against the will of its voters even as it launched the nation\u2019s most expensive private school voucher program, has since had to cut funding for community colleges, road repairs, water projects and services for disabled children. In West Virginia, where former Gov. Jim Justice (now a U.S. senator) signed the latest of multiple income tax cuts into law in 2024, deficits of $400 million and growing are expected in the coming years. Funding for education, child care and health care in the state has been decimated.<\/p>\n
And that\u2019s all before the One Big Beautiful Bill Act fully goes into effect, which will force states to come up with hundreds of millions to billions of dollars to cover new SNAP and Medicaid costs. The magnitude of the fiscal hit that they\u2019re going to take is still coming into focus, with the cuts to the two safety net programs delayed by congressional Republicans so that most of the changes will be phased in from 2027 to 2029, after next year\u2019s midterm elections.<\/p>\n
On the SNAP side of the equation, all states will see the amount that they already pay for the administration of the program increased by 25%. Separately, for the first time ever, each state will soon have to pay for a percentage of the actual SNAP benefits that go to recipients. Exactly how much that is will depend on how much they\u2019re penalized for their SNAP \u201cerror rate,\u201d a measurement of how often they accidentally make incorrect eligibility decisions or overpayments or underpayments to beneficiaries.<\/p>\n
By way of example, North Carolina will likely have to start paying out an estimated $420 million annually in SNAP benefits that the federal government used to cover, based on the state\u2019s relatively high current error rate. That\u2019s on top of the fact that it is presently the only state in the nation heading into the new year without a full budget, in part because lawmakers are gridlocked over whether to spend money on Hurricane Helene recovery efforts, teacher pay raises, Medicaid or a new children\u2019s hospital ($535 million for that project has been a major sticking point), among many other priorities.<\/p>\n
Recent cuts to income taxes will cost the state $1 billion this coming year alone in revenue that could have been used toward any of these ends.<\/p>\n
When it comes to Medicaid, states will among several other things be required to implement new work requirements and to check many recipients\u2019 eligibility for the program twice a year, which will mean new expenditures on additional staff, retraining of existing staff and technology to process all that paperwork. (When Georgia implemented such work requirements recently, it spent twice as much on administrative costs as it did on providing actual health care, the Government Accountability Office found.)<\/p>\n
\u201cWhat states like ours have been doing is more radical than anything that\u2019s ever been done in terms of tax cutting at the state level,\u201d concluded Jason Bailey, founder and executive director of the Kentucky Center for Economic Policy. \u201cTell me how that works if you\u2019re trying to maintain a Medicaid program.\u201d<\/p>\n
Part of why this post-pandemic state tax-cutting spree has gone relatively unnoticed is that tax cut proponents are conscious of what happened not so long ago in Kansas. There, Gov. Sam Brownback in 2012 signed a set of enormous income tax cuts into law to much fanfare, only for them later to be repealed by a bipartisan supermajority after they caused severe economic and political pain. Brownback, with support from ALEC, the Koch brothers and the anti-tax crusader Grover Norquist, had said that the \u201cKansas experiment\u201d would show how tax cuts spur economic growth and create jobs. Instead, state revenues fell by hundreds of millions of dollars and funding for education and infrastructure had to be slashed.<\/p>\n
This time around, most of the 26 states that have cut their income taxes are doing so over a period of years, thus delaying some of the fiscal fallout and diffusing media attention. But what that approach didn\u2019t anticipate is how quickly the hurt would be felt if massive funding cuts were to simultaneously come from the federal level.<\/p>\n
To be sure, absorbing the costs of the Trump law will be difficult for states no matter their tax structure. Several blue states that have enacted no income tax cuts or more minor ones in recent years, including Connecticut, New Mexico and Oregon, have nonetheless had to call special legislative sessions over the past several months because they too are worried about the federal budget picture.<\/p>\n
Advocates and experts at conservative organizations, in interviews and emails, defended states\u2019 recent tax cuts even in the context of the budget pinch to come.<\/p>\n
Jared Walczak is vice president of state projects at the Tax Foundation, a think tank that has provided testimony on several of the recent state tax cut bills. He acknowledged that there was a \u201csugar high\u201d of extreme state revenue growth just after the height of the pandemic and through 2023, which wasn\u2019t sustainable. Still, Walczak said, revenue remains higher in most states than it was in the 2010s. And cutting taxes from that place of growth was a wise move for the states that did so \u2014 especially because the modern economy is so fluid and competitive, with both businesses and individuals moving across state lines to where taxes are lower. New York and California, with their higher tax rates, have seen \u201cout migration\u201d in some recent years, he pointed out.<\/p>\n
Walczak said it would be difficult, though, to tell how this calculus might change in the face of the upcoming cuts to SNAP and Medicaid. He said the situation would indeed \u201cforce some hard choices\u201d on states, such as whether to reduce their Medicaid rolls in response to the federal law or to consider returning some tax rates to previous levels.<\/p>\n
\u201cBut whether you\u2019ve raised [taxes], lowered them or kept them the same, you will still face similar choices,\u201d he contended. \u201cEveryone\u2019s in the same boat \u2014 that whatever your budget is now, your budget just got a little tighter. \u2026 Everyone is going to experience more stress against their baseline.\u201d<\/p>\n
A spokesperson for Americans for Prosperity, meanwhile, noted that the group hasn\u2019t just advocated state income tax rate cuts, it has also emphasized the need for tax reforms that \u201cbroaden the base\u201d of taxable economic activity, as well as spending restraint.<\/p>\n
Liberal state budget experts and advocates countered that a more cautious fiscal approach over the past five years, including saving more surpluses in rainy-day funds rather than jumping at the opportunity to cut taxes, would have better protected essential services and vulnerable populations from future federal funding reductions. Instead, to help pay for their tax cuts, many states have already raided their various cash funds. \u201cWe\u2019ve sort of maxed out on gimmicks,\u201d said Geraldine Miranda, assistant director of fiscal policy at the Arizona Center for Economic Progress. \u201cThere\u2019s nothing left in the couch cushions.\u201d<\/p>\n
And raising income taxes, especially after they\u2019ve just been cut, is easier said than done, politically speaking. \u201cWe always try to get the Legislature to open up to the idea of raising revenue,\u201d said Craig Beck, research director at the OpenSky Policy Institute, a Nebraska think tank. \u201cBut we\u2019re met with just complete disregard.\u201d<\/p>\n
As a result, cutting programs and services will be the most likely route for states as the Trump law takes effect, experts said. Even though the proximate cause will have been the loss of funding for SNAP and Medicaid for lower-income people, those in the middle class will feel the consequences too. States, unlike the federal government, have to balance their budgets. So, everything from raising tuition at state universities to canceling unfinished state road projects to freezing state workers\u2019 salaries is now on the table, as states try to find the money to address the budget dilemma that they themselves are partly to blame for creating.<\/p>\n
In an article published in October, Joshua Meyer, director of the tax and fiscal policy task force at ALEC, wrote that the \u201cgenerational effort\u201d to eliminate states\u2019 personal income taxes is now finally coming to fruition from Oklahoma to Kentucky to Mississippi.<\/p>\n
West Virginia might be next. With the backing of many of the same organizations that once supported the Kansas experiment, multiple rounds of income tax cuts have been enacted in the Mountain State in recent years. This has led, among other things, to worsening understaffing at the very state agencies that will have to carry out the Trump administration\u2019s orders with regard to SNAP and Medicaid, like implementing work requirements and trying to reduce instances of fraud, waste and abuse. \u201cDue to vacancies, [economic service workers] are carrying an average caseload of 947 cases. This makes this job nearly impossible,\u201d reads a recent West Virginia budget report.<\/p>\n
Matt Rohrbach, the Republican deputy speaker of the West Virginia House of Delegates, still supports those tax cuts, which he said have produced economic growth. \u201cBut if we suddenly have to take over all the costs for SNAP and for Medicaid or even a significant part of it,\u201d he told ProPublica, \u201cthat\u2019s really going to put a hurt on a state like ours.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
This fall, Americans got to see what it\u2019s like to go without a safety net for the hungry. With the U.S. government shut down for multiple weeks and President Donald Trump refusing to fund SNAP, the federal food stamp program, a panic set in among the more than 40 million people who rely on it.<\/p>\n","protected":false},"author":1,"featured_media":36637,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[55],"tags":[187,562,1660,247,3172,199,101],"class_list":{"0":"post-36636","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-social-issues","8":"tag-crisis","9":"tag-cuts","10":"tag-lead","11":"tag-propublica","12":"tag-snap","13":"tag-state","14":"tag-tax"},"_links":{"self":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/36636","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=36636"}],"version-history":[{"count":0,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/36636\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/media\/36637"}],"wp:attachment":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=36636"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=36636"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=36636"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}