State legislatures are grappling with significant fiscal decisions following a sweeping federal law signed by President Trump that shifts more financial responsibility for Medicaid and SNAP to the states. To comply with the law, states must decide whether to fund increased administrative costs and potential benefit penalties while also implementing new Medicaid work requirements that could leave millions uninsured. Additionally, lawmakers are weighing whether to align state tax codes with new federal exemptions for tips, overtime pay, and corporate breaks. These looming expenses and policy shifts arrive as many states face their tightest budget environments since the pandemic, forcing difficult choices between cutting services or increasing state spending.
Date: January 8, 2026. Source: apnews.com