Trump policy bill could bring $160 million hit to state budget

Yahoo

20 hours ago

Section D subcommittee chair Rep. Bill Mercer, R-Billings, outlines the Section D portion of House Bill 2 during the second reading floor discussion on the budget for the next biennium on March 22, 2023. (Photo by Blair Miller, Daily Montanan)
Changes outlined in President Donald Trump's sweeping domestic policy bill impacting Medicaid expansion, the Supplemental Nutrition Assistance Program, and taxes could be a $160 million hit to Montana's state budget, according to an estimate this week from the Legislative Fiscal Division.
Legislative Finance Committee members met this week and, among numerous topics, heard a report from the Legislative Fiscal Division on impacts of federal legislation. A couple of Democrats described the potential reductions as 'staggering' and 'frightening.'
Trump's tax cuts would reduce revenue from the taxable income of Montana by $122 million, said Josh Poulette, with the state's fiscal division.
The changes could mean 'either less general fund coming in or more general fund that needs to go out,' Poulette said during the finance committee meeting.
Additionally, if the federal bill was signed into law in its current form, the state would be on the hook for more than $26 million in SNAP benefits if it was to keep the program running as it is now.
Legislators heard the report Tuesday, and at the meeting, the committee discussed potential dates for a special session of the Legislature to address the reductions should one be needed.
Trump's bill could be signed into law soon. While speaking with Treasury Secretary Scott Bessent during a Senate Finance Committee hearing on Thursday, U.S. Senator Steve Daines said lawmakers in the Senate are trying to get it on the president's desk by July 4.
Daines also said the Congressional Budget Office is wrong in its forecast of revenue projections and that the bill will 'make some of the largest cuts, true spending cuts, to this runaway spending from the federal government in American history.'
The biggest direct hit to the state's budget would be the reduction in taxable income. It means the state would have more than $120 million less in its general fund because the law changes deductions.
SNAP would become more expensive because the state would be required to provide a match. The federal government currently pays for the cost of all SNAP benefits.
'This would be tied to the payment error rate of the state. So essentially, the feds do a backward looking error rate calculation for SNAP, and they've got historical data on that,' Poulette said during the meeting. 'Montana's error rate has hovered in that 78% range over the years. That would equate to Montana having a 15% match requirement that would come out to a cost of about $26 million additional state funds per year.'
Medicaid expansion, meanwhile, could see 27,000 people dropped. Medicaid covers about 13% of all workers in the state. The Montana Legislature this session approved an extension removing the Medicaid expansion sunset date.
One of the big changes the federal bill makes is increased work requirements to be eligible for benefits. Montana already has this law on the books, but it's never been enforced, and the Biden Administration did not approve the state's request to add the stipulation.
Most people on Medicaid expansion already work, and in Montana, the number of people who are enrolled in the program and work is 72%. Another 7% are caretaking, 2% are retired and 10% are acutely ill or disabled and have serious barriers to employment.
Poulette also said there is 'essentially a ban' on new taxes on medical providers. Those taxes are often pumped into the Medicaid program, he added.
Rep. Connie Keogh, a Missoula Democrat and a member of the committee, called the impact to the budget 'frightening' during Tuesday's meeting, while Rep. Paul Tuss, D-Havre, said during the meeting the numbers were 'staggering.'
Gov. Greg Gianforte's office did not respond to a request for comment. However in a recent 'Leave Us Alone' podcast episode, the Republican governor did speak on the topic.
'If you believe in limited government, the best way to produce that is to limit the amount of money government collects,' Gianforte said. 'Let's leave it in the people's pockets.'