Within the backdrop of congressional budget reconciliation, there will be no easy decisions for the House and Senate Ag committees when it comes to meeting their savings target – a target they didn’t ask to receive.
When considering how they’ll hit their required cost-cutting number, among the range of ideas for reducing federal tax dollars used for USDA’s Supplemental Nutrition Assistance Program, and the laudable goal of not cutting food benefits for low- and no-income people, a proposal to require a federal-state cost-share match for SNAP food benefits would hit states’ economies twice.
In fact, any percentage of funding required for states to match would double that percentage’s hit to states’ economies.
Here’s how:
First, current law provides SNAP participants with food benefits funded 100% with federal tax dollars. In other words, after states’ citizens and businesses pay federal taxes, a portion of those federal taxes is returned to states’ economies by Congress in the form of SNAP food benefits.
Second, the reason Congress would consider such a cost-share match is to achieve “budget savings”, which represents a reduction in the share of federal tax dollars collected and not returned to states.
Third, if Congress passes a federal-state cost-share match requirement for SNAP food benefits, then not only would a state need to pony up state taxes from their citizens and businesses to pay for their share of the federal match, but the state’s economy would also forgo an equal amount of federal taxes paid and not returned to the state.
For example, to illustrate a 10% SNAP federal-state match cost-share for one year, assuming states pay the full amount of the match so no one loses food benefits:
- In 2024, Arkansas had 240,122 people participating in SNAP with over $549 million in federal taxes returned to the state as food benefits. For a 10% cost-share, the state would’ve needed $54.9 million in state revenue to meet the federal match requirement, and the state would have forgone $54.9 million in federal taxes returned. This represents a delta of 20%, a $109.8 million hit to the state economy (extra state taxes plus fewer federal taxes returned).
- Using the same formula, Alabama would have received a $347 million hit to the state economy, Florida $1.3 billion, Georgia $654 million, Iowa $106 million, Kansas $82 million, Kentucky $230 million, Minnesota $171 million, Mississippi $168 million, Ohio $636 million, Oklahoma $301 million, Pennsylvania $854 million, South Dakota $36 million, and West Virginia $113 million.
- Nationwide, the total hit to state economies in 2024 would have been $18.7 billion, at a time when many state budgets are shrinking.
Therefore, as budget reconciliation negotiations continue, a SNAP cost-share would hit states’ twice – extra state revenue needed to meet the federal match, and an equal reduction in federal taxes not returned to states’ economies. Our elected federal Ag committee leaders will face tough choices, and with eyes wide open, states might be seeing double.
Eric J. Steiner is a senior policy adviser at Olsson Frank Weeda Terman Matz PC