States Brace for Added Burdens of Trump’s Tax and Spending Law

The ink is not even dry on the far-reaching domestic policy law that President Trump signed on Friday, and already state governments are bracing for impact as Washington shifts much of the burden for health care, food assistance and other programs onto them.

Gov. JB Pritzker, Democrat of Illinois, and legislative leaders might hold a special session to deal with the new law, even though the recently passed state budget already includes $100 million to cover shortfalls in federal funding.

Another Democrat, Gov. Katie Hobbs of Arizona, has warned that even her state’s $1.6 billion emergency fund will be insufficient to weather what’s coming, because “even if we cut every single thing in the state, we don’t have the money to backfill all these cuts.”

Even before the bill’s final passage, state capitals were contending with a slowing economy and federal spending cuts implemented by the Department of Government Efficiency run by Elon Musk. Now they will be expected to administer complex new work requirements for Medicaid and food aid; rework some state health insurance exchanges under the Affordable Care Act; and decide how much they can do to keep their citizens insured and fed once they start losing federal assistance.

“What’s happening in Washington, D.C., is undermining everything we’ve been working on,” said Gov. Laura Kelly of Kansas, a Democrat.

State budgets have been generally strong in recent years as a result of billions in Covid-19 relief money, economic growth and a record-breaking stock market that has generated more taxes than anticipated. A robust jobs report on Thursday looked rosier that expected, in large part because gains in state and local government employment last month obscured stagnant job growth in the private sector.