Crews install portraits of the state capitol buildings at the Thomas Michael Menino Convention and Exhibition Center on August 4 in Boston. Many lawmakers attending the annual summit of the National Conference of State Legislatures said they were still grappling with how to respond to President Donald Trump’s top tax and spending legislation. (Photo: Kevin Hardy/Stateline)
During this year’s budget cycle, Oklahoma State Sen. John Haste said lawmakers have two main issues on their minds.
“Number one is tax cuts. Number two, what the hell is going on in Washington?” he said last week at a national gathering of state lawmakers in Boston.
While Oklahoma lawmakers secured another round income tax cuts, are still blind to the fiscal impact of President Donald Trump’s massive spending and tax rules, Haste said. This solution cuts funding for health care and food aid.
That legislation and other Trump actions emerged as a major topic of discussion at the National Conference of State Legislatures summit, which organizers said was the largest-ever gathering of state lawmakers, attended by more than 1,600 people. In addition to funding cuts, the bill imposes up-to-date, costly administrative burdens on states.
States are still analyzing the long-term effects of the legislation and what, if any, actions they can take to soften the blow.
Tracking the work status of Medicaid patients could prove hard for states
Haste, a Republican, said concerns are greatest in rural areas, where reduced Medicaid funding could threaten hospitals. He said just one provision of the bill would cut $209 million from funding that helps Oklahoma cover Medicaid costs, and that the state would have to spend an estimated $30 million on up-to-date costs for twice-yearly eligibility checks.
“All these things together add up to a really big number,” he said, but added: “We don’t know exactly what it is.”
Lawmakers from liberal and conservative states said they were still grappling with the consequences of the legislation signed by Trump. Because most states boast solid budget positions, some expect to cover up-to-date upfront administrative costs by drawing on forceful reserve funds. However, many are considering cutting back on services.
Nevada Sen. Fabian Doñate, a Democrat, said state leaders would have to cut Medicaid eligibility or services since Republican Gov. Joe Lombardo said he would oppose any effort to raise taxes.
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“This is becoming a challenge, isn’t it?” Doñate said during a panel discussion on Medicaid. “Do you cut a pregnant mom or someone who is above 180% of the federal poverty level who is under 50, or do you cut diapers for seniors?”
At the same time, countries must prepare for Washington’s up-to-date bureaucratic mandates.
“No matter what you think of these provisions – whether they are opportunities or challenges, fantastic or terrible – regardless, this will be a heavy burden on the states,” said Lauren Kallins, NCSL senior legislative director for state-federal affairs.
She said states and organizations, including NCSL, are still waiting for detailed federal guidance on all the changes, which are spread out over several years. However, countries will have to react quickly.
One provision of the law requires the 40 states and Washington, D.C., that have expanded the Medicaid program to check records at least twice a year to make sure enrollees meet the up-to-date job requirements. The legislation provides for an amount of $200 million, but question from experts Is this enough to assist countries implement the changes by the end of 2026?
To meet that deadline, Kallins said, states will need to escalate contact with Medicaid beneficiaries and make up-to-date investments in technology. Similarly, states must cover up-to-date administrative costs under the Supplemental Nutrition Assistance Program, or SNAP, commonly known as food stamps.
Traditionally, the federal government has fully funded SNAP benefits and shared the program’s administrative costs with states. The up-to-date law requires states to finance 75% of administrative costs and requires some states, depending on the accuracy of eligibility determinations, to finance part of the benefits.
“This is another very significant increase for states,” Kallins said.
Countries take a ‘very, very forceful position’
Although there is an escalate in revenues slowdownlawmakers and experts pointed out that many states currently enjoy forceful fiscal fundamentals.
Democrats in the Statehouse want to employ Trump’s huge bill to woo Republicans
This is true in Utahwhich touts deep reserve financing and a rapidly growing economy.
Utah State Finance Analyst Jonathan Ball told conference participants the state could employ some of its reserves for one-time administrative and technical costs related to federal legislation.
He said lawmakers and budget writers always have to find innovative ways to solve their state’s budget puzzles.
“It may be a little scarier, but it’s not a new problem,” he said. “I think you all have the tools, we feel like we have the tools to fix this.”
Still, he said the potential for further cuts in federal funding raises many questions.
“The uncertainty about what will happen in the future is huge,” Ball said.
In a separate session on state budgets, financial analyst Geoffrey Buswick said most states have enviable credit ratings, which means investors can be confident in the state’s ability to repay its debts, which earns it lower interest rates.
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Buswick, managing director and sector leader for public finance at S&P Global Ratings, said states likely have budget cushion to adjust to changes in federal policy.
“The states are in a very, very strong position – almost the strongest position we’ve ever seen,” he said.
Maryland Democratic Sen. Karen Lewis Young didn’t buy that assessment.
She said her state recommends forceful reserve funds, but they can only be used for one-time expenses, not to permanently replace eliminated funds. Maryland stands ahead huge decline federal jobs, along with federal cuts to funding for transportation, health and education.
“What am I missing about your optimism?” – she asked the financial analyst.
Cuts to Medicaid are likely to worsen mental health care in rural America
She then told Stateline that Maryland could tout a stronger position compared to other states. However, she added that even with low unemployment and high average income, federal legislation forces hard decisions on legislators, who are constitutionally obliged to balance the state budget.
“You have to cut from a different place,” she said. “If you lose a pretty big chunk of a federal match, who do you cut?”
“Significant headache”
Across the country, Democratic lawmakers hope so highlight indents Trump’s up-to-date law will weigh on Republicans in state races this year and next.
Hawaii State Sen. Ronald Kouchi, a Democrat, said lawmakers need to make sure voters understand where the spending cuts came from.
“Who can be blamed when people are excluded, when they go hungry and lose educational opportunities?” – he asked during the panel. “If we as state lawmakers do not communicate that this is the result of the actions of policymakers in Washington, they will come to us as a last resort.”
Kouchi, the state Senate president, said Hawaii leaders have placed more than $1 billion in reserves. But he said the state can’t fill all the funding gaps, especially at a time when officials are trying to allocate more to fund natural disasters and grapple with a slowdown in tourism.
“The state currently does not have the financial capacity to meet the needs of all people affected by the crisis,” he said in an interview.
We have no idea yet how we will react to this.
– West Virginia Republican House Speaker Roger Hanshaw
New Mexico state Rep. Meredith Dixon, a Democrat, said her state should be somewhat isolated after surplus oil and gas revenues were directed to up-to-date Medicaid Trust Fund. But she said it’s still unclear how much pressure the federal legislation will put on the state.
“We are not protected by any security. So we have to think about how to cover these costs. (…) We are still analyzing everything.”
West Virginia House Speaker Roger Hanshaw, a Republican, said no one in the federal government or at the state level seems to fully understand the implications of the legislation.
“I look at this bill as Obamacare 2.0: We need to pass it so we can figure out what’s in it,” he told Stateline.
Hanshaw said the law has some provisions that will benefit West Virginia and others that will cause “a major headache.”
“We have no idea yet how we will respond,” he said. “I don’t want to speak for any other state… but I would speculate that this is true for almost every other state.”
Stateline reporter Kevin Hardy can be reached at: khardy@stateline.org. state line is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity.
