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States Can’t Afford Trump Budget’s Massive Cost Shift

February 15, 2018 at 10:15 AM

President Trump’s 2019 budget would shift massive new costs to states and localities at a time when many states are already struggling to meet the needs of residents and businesses. It:

Slashes funding for Medicaid and marketplace subsidies that help low- and moderate-income people buy coverage. The budget would repeal the Affordable Care Act (ACA), including its Medicaid expansion and marketplace subsidies, and replace them with a vastly inadequate block grant to states that would provide hundreds of billions less funding and not adjust for unexpected costs. The budget also would convert Medicaid funding for seniors, people with disabilities, and families with children to a “per capita cap,” limiting federal funding regardless of need and cutting funding by large and growing amounts over time. These enormous cuts would force states to contribute more of their own funds or scale back Medicaid eligibility, benefits, and provider payments.

Congress won’t likely approve the Trump proposals this year, but the budget makes clear that they’re major priorities for the President should Republicans retain the House after the 2018 elections and add a seat or two in the Senate.

Sharply cuts other federal programs that help low-income families. For instance, the Trump budget slashes funding for the Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps) by a stunning $213 billion or nearly 30 percent over the next ten years. These cuts likely would drive up state costs by increasing hunger and hardship, thus causing more people to seek state-funded forms of help, especially since the budget also sharply cuts other forms of federal assistance for low-income families.

The budget also eliminates the Community Development Block Grant and Social Services Block Grant, taking billions of dollars that states and localities use to build stronger communities. It cuts funding for Temporary Assistance for Needy Families (TANF), which states use to provide cash assistance, child care, education and job training, and other services to low-income families. And it cuts federal housing assistance programs and pushes up rents for low-income residents, thereby likely increasing homelessness.

Cuts the federal budget area that includes most other federal aid to states. By 2028, the Trump budget would cut non-defense discretionary (NDD) funding — which supports a wide range of state and local programs, from schools and child care assistance to water treatment plant construction, police and fire departments, and more — down to 42 percent below the 2017 level, after adjusting for inflation.

The budget also reneges on the bipartisan congressional budget deal, which was designed to avert the deep NDD cuts scheduled for 2018 and 2019 under prior law. The Trump budget’s NDD funding level in 2019 is even lower than that previously scheduled level, which Congress just agreed is too low to meet national needs.

The Trump budget also includes deep cuts in specific NDD programs that states and localities deliver. For instance, it eliminates the Low Income Home Energy Assistance Program (LIHEAP), which helps millions of low-income seniors, people with disabilities, and others in need pay their home energy bill.

Relies on states and localities for much of its claimed “$1.5 trillion” infrastructure plan. The Trump budget includes only $200 billion in new federal infrastructure initiatives, and simultaneously cuts support for existing forms of infrastructure investment. State and local governments would need to raise large amounts of their own funds to come anywhere close to the President’s claimed $1.5 trillion in new investment in roads, transit, water systems, and the like.

The budget hopes to attract private-sector investors to infrastructure projects, but investors won’t likely support projects that don’t generate revenues, such as school construction or rural highways, no matter how badly they’re needed. And in some cases, the projects could create windfalls for investors by subsidizing projects they might have pursued anyway.