Trump cuts exacerbate budget fights in red states

Republican legislatures already grappling with budget shortfalls consider further cuts and new taxes to cover funding gaps worsened by the "big, beautiful bill."

Amanda Hinton speaks about work requirements for Medicaid and the Supplemental Nutrition Assistance Program during an interview, July 1, 2025, at the Samaritan Center food pantry in Jefferson City, Montana. | David A. Lieb/AP

Republican-led states facing major budget shortfalls in 2026 are facing an awkward reality: President Donald Trump’s signature tax and spending bill is making their problems worse.

Federal tax cuts approved by Republicans as part of the megabill, coupled with new requirements for Medicaid and the Supplemental Nutrition Assistance Program, are costing some states as much as $450 million this year in added costs and lost tax revenue, further squeezing budgets that were already stretched thin. Legislatures are now considering cuts and reallocations, including a cut to child care subsidies in Missouri, a 5 percent reduction across state agencies in Arizona and a $22 million cut from disability services in Idaho.

“We’re stealing from Peter to pay Paul,” Idaho Republican state Rep. Jordan Redman said recently. Aligning Idaho’s state tax with Trump’s federal tax cuts is estimated to cost the state $155 million in 2026 and $175 million in 2027, according to the governor’s office. “It’s put us in a predicament where now we’re trying to figure out, ‘Ok, what programs do we keep? What programs do we cut?’”

© Politico