Yasmin Peled: Hello everyone and welcome to today’s webinar presentation, Protect Medicaid: State Revenue Strategies for Aging and Disability Advocates. I’m Yasmin Peled, Director of California Government Affairs here at Justice in Aging. Today I’m joined by my colleague, Natalie Kean, Director of Federal Health Advocacy at Justice in Aging, Wesley Tharpe, Senior Advisor for State Tax Policy at the Center on Budget and Policy Priorities, and Kelly Allen, Executive Director of the West Virginia Center on Budget and Policy.
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On today’s webinar, we are going to begin with an overview of H.R. 1 funding cuts and why aging and disability programs are at risk. Then Wes from the Center on Budget and Policy Priorities will provide an overview of state budget processes and revenue. Then we’ll turn it over to Kelly from the West Virginia Center on Budget and Policy to detail how West Virginia advocates are engaging in their state’s budget process to protect Medicaid and other programs.
And then finally, we will have some time for Q&A. And just to set the scene here, due to the passage of H.R. 1 and its tremendous cuts to Medicaid, SNAP, state budgets nationwide are preparing for severe budget deficits that will put vital services for older adults and people with disabilities at risk. This won’t just be a red state or a blue state issue. All state advocates are going to need to engage in this advocacy.
I can say that even in California, there are political headwinds that make raising revenues difficult, but the need for these new revenues to fund important programs is more critical than ever. Now I’m going to turn it over to Natalie to get us started.
Natalie Kean: Great. Thanks, Yasmin. So to get into a little more detail on H.R. 1, this is the Budget Reconciliation Act of 2025 that was signed into law July 4th last year. And the reason why we need to start with this when we’re talking about state budgets is because of the massive cuts that this law is making to federal funding for programs like Medicaid. It made by far the largest cuts to Medicaid in history, $990 billion over 10 years. And when we add cuts to Medicare and the Affordable Care Act and SNAP, the total is well over a trillion dollars.
This cut to federal funding means shifting costs for operating these programs to states. Congress also cut federal SNAP funding by 20% and shifted those costs to states for the first time. H.R. 1 adds new administrative costs for states to set up complicated systems to administer new mandated work requirements in Medicaid, and it curtails the ability of states to fund their own share of Medicaid costs by severely limiting provider and insurer taxes.
This further reduces federal Medicaid spending because states can’t get federal reimbursement for Medicaid until they spend their own money. The bill also creates new barriers to Medicaid access that directly harm older adults and people with disabilities and the Medicaid program more broadly. It particularly takes aim at Medicaid expansion under the Affordable Care Act, seeking to reduce enrollment, which amounts to another funding cut because states get the highest federal match for these enrollees.
Next slide. So the impact of all of these cuts is that states are left holding the bill and Medicaid is a huge bill. It’s 30% of a state’s budget on average. So states will be under a lot of pressure to cut optional benefits, enrollment, and provider rates to balance their budget. Optional programs are those that states can choose to offer or not, which includes things like home and community-based services for long-term care, dental, vision, and hearing services.
These are benefits that older adults and people with disabilities cannot do without, but they are optional for states to provide. It’s estimated that 86% of optional spending under Medicaid supports older adults and people with disabilities. Next slide. So cuts to home and community-based services or HCBS are of particular concern because these services account for nearly a third of Medicaid spending and are the largest spending dial the state has. This isn’t hypothetical that these services could be cut.
We know from history when federal funding is cut, states do cut their HCBS programs. After the Great Recession, every state cut one or more of their HCBS programs to make up for federal funding cuts. They cut spending on HCBS waivers, personal care services, and home health. The number of people served was reduced by between two and 15% across states. Waiting lists for home and community-based services also grew, and some states even eliminated entire programs, which took years of advocacy to restore.
So again, though these services are optional for the state to provide, they are not optional for people who need care. Medicaid is the only source of coverage for most. So when people with disabilities and older adults have their HCBS services cut or are put on waiting lists, they’re often forced to move into nursing facilities where they don’t want to be and which actually costs the state more money. Next slide. Some states have already started to announce cuts to HCBS, dental services and other programs.
Note, these are just examples. And on this slide, these are proposed cuts, so they have not been implemented and they can be stopped. In terms of HCBS, we’ve seen in Utah announcements to potentially cut HCBS waivers. In Colorado, there’s been several rounds of cuts announced, and the most recent is cuts to homemaker services and community outing supports. In Missouri, there are cuts targeted to people with intellectual and developmental disabilities on the table.
And in Nebraska, they’re considering caps on the hours family caregivers can be paid. In terms of adult dental coverage, Massachusetts is considering adding a $1,000 annual cap, and Colorado reinstating a cap of $3,000 per year on dental benefits. And most worrisome of all, some states are, again, proposing to eliminate entire programs. Idaho, the governor there, has proposed eliminating all of their HCBS programs and adult dental.
Next slide. And some states have already implemented cuts starting last year because they know what’s coming down the pike and they’re already facing budget pressures. For example, California reinstated its asset limit for older adults and people with disabilities and rolled back expanded eligibility for immigrants. Several states have approved cuts to provider reimbursement.
Provider reimbursement directly corresponds to access, especially services like HCBS, where there’s already a workforce shortage due to the pay for direct care workers being extremely low. So here we have examples of Idaho making an across the board cut to provider reimbursement that includes reimbursement to HCBS and dental providers. The North Carolina governor announced cuts last year to provider rates, but has rolled them back because of litigation.
And these cuts though are still on the table as the legislature considers the budget. And Colorado had previously announced they were going to increase provider rates, but that has now been reversed and they actually instituted cuts to reimbursement for dental and other services. Next slide. So I’m going to leave you here with a few of Justice in Aging’s resources on H.R. 1, more about what the cuts mean for older adults and some advocacy tools in there as well. And now I will turn it over to Wes.
Wesley Tharpe: All right. Thanks so much, Natalie, and hi, everyone. It’s a real pleasure to be on, and I’m looking forward to sharing some insights, hopefully, and to getting into the conversation. So I’m Wes Tharpe. I am Senior Advisor for State Tax Policy at the Center on Budget and Policy Priorities in Washington, DC. Center on Budget is a nonpartisan research and policy institute that advances federal and state policies across a wide range of lines of difference to build a nation where everyone essentially has the resources they need to thrive and to share in our nation’s prosperity.
I’ve been with the state fiscal policy team here at the Center for over seven years now and in this general line of work for about 15 years overall, really helping focus on working with state policymakers, partners, advocates across the country to navigate questions around state revenue, and particularly its essential role in supporting services and people and communities in every state.
And so I’m looking forward to our time here together, and I will jump right in. So this is the place I’d like to start. State budgets and the people they serve in 2026 and the coming years are really facing enormous pressure, as Natalie was sharing, on two main fronts, one being that basket of federal policy changes recently enacted through H.R. 1, including major healthcare cuts, significant new costs and responsibilities for states under SNAP for food benefits.
And then also a third factor that I won’t detail here, but it is something that’s starting to really impact state debates and upend revenues as well, which are basically spillover costs from the major federal tax cuts for predominantly wealthier taxpayers that have some implications for states as well that are something that state budget riders are wrestling with also.
The second major factor though shown on the right to expand on this general challenge that states and state budgets and services are facing is a raft of policies that states themselves in many places have been adopting over the past few years. In particular, over the past five years, we’ve seen a wave of oftentimes very costly reductions in state’s personal and corporate income taxes.
We’ve seen a proliferation of an increasingly soaring cost from various state programs that essentially divert public revenue from public education to private schools. And then third, we’ve also seen a spread of increasingly extreme sort of cuts and caps to local property taxes, which, of course, affect a wide range of services, including schools, libraries, senior centers, infrastructure, and the like.
And so moving to the next slide, I will just note that these are trends that I’m sure many people here on the call are already well-versed in and that have been increasingly well-documented. Just to highlight the point and drive it home, this here is a headline from a major publication on state policy issues saying that states brace for budget shock amid federal changes.
Program and tax changes in the massive budget reconciliation bill are reshaping states’ short and long-term fiscal pictures, and how will they respond, which is something I definitely want to get to. The next slide is then just illustrating and reiterating really that second basket of challenges that states are increasingly facing. Headlines showing how the wave of tax cuts on the state level has left many states vulnerable to President Trump’s SNAP and Medicaid crisis.
And then also as shown on the right, a headline again, lifting up the point that the spread of these costly school voucher programs are now rapidly eating into state budgets as well. Now, pausing for a moment to take a slight step back and to really get into some of the details here, why are these pressures important at all to people and communities and the things we all care about? And there’s a few reasons.
One is as highlighted in the pie chart on the right, about one in every three dollars available for investment on the state level comes from the federal government, which means that any significant drop in federal support means that states are going to have to look at making some potentially painful trade-offs. Two is that those state income and property taxes that have been increasingly under threat, as I referenced, really are some of the major workhorses of essentially how states and localities pay the bills and how they support the range of services available.
Third and really, really critically for reasons we’ll get into here for a moment are that states and localities for that matter have to balance their budgets on an annual basis. That is unlike Congress, which for some very good reasons is allowed to run an ongoing deficit on a year-to-year basis or over time.
But because states can only support the funding available with the revenues they have, that means they face significant choices and trade-offs, and it also means major risk of harmful cuts when revenues go down, not just to state’s newer responsibilities for food assistance and now healthcare with those H.R. 1 cuts, but also major risk of essentially shifting of funds around from other also vital state and local services, be it schools, housing, childcare, or other things.
Now, on the next slide, we’ll see what are some of those key services, those critical supports that we all count on at the state level that are now under threat, again, from the combination of federal cuts as well as these other state pressures. Thinking about what states fund overall, on an annual basis in aggregate, they invest about $1.2 trillion in a range of things, from schools, healthcare, and other services.
Looking to the right, I want to zero in a bit on the three biggest pieces of the pie chart here, which is that 34% going to K through 12, 19% for Medicaid, and then another 9% for higher education. Add those up, what you basically get is that roughly two-thirds of state budgets nationwide, those dollars are going to support a combination of public education and healthcare. Now, what that means in times of scarcity is a couple things I’ll really quickly highlight.
One is that those two buckets, again, public education and healthcare, are really its extreme risk of potentially sizable cuts. I know we’ve heard a lot about the risk of healthcare cuts and the legacy of reductions there. But another example is during the Great Recession, there were a wide range of cuts to K through 12 education that were made in states, for example, to teachers and vital support services that were never actually fully reversed. Those cuts were so deep due to revenues going down that they were at least partially permanent in many states.
And then second is that those, if you will, smaller pots of money as well that also fund incredibly important services for things like transportation, public assistance, various sorts of community services as well across states, those things are also very much at risk when revenues go down because policymakers will oftentimes in many states try to look for as many little pots of money as they can, in some cases, to offset as long as they can cuts to larger, more popular and visible services.
And so there’s really widespread risk of harm to really critical supports. So that was a focus on where the dollars go and what’s under threat from this growing pressure on the state level. But now let’s briefly take a step down to where those dollars are coming from to highlight one of the key sources of that underlying pressure, again, to state budgets and services. Now, taxes overall on the state level account for about half of the money available in a given year in state budgets nationwide.
The rest coming from the federal government as mentioned and various other smaller fees. But of those taxes, as shown on the right, about half are coming from personal or corporate income taxes, that gray 38%, and then up towards the top left of the pie chart, the corporate income tax share as well. Those are the revenue sources that, as I alluded to earlier, have really been under sustained assault of sharp cuts from state policies adopted in recent years. So that was a lot about the challenge.
And now I want to turn to a few minutes on the opportunity that states are facing, which are that state revenues and state revenue policies really are going to be an essential tool for how state and local policymakers and advocates can think about fueling a brighter path forward.
The core tenant of revenues is really important across a wide range of reasons, with four particular priorities I’ve lifted up here, which are without sufficient revenues on the state and local level, policymakers won’t be able to do things like maximizing the funds available to help states mitigate and offset those health coverage losses and other health cuts. States also need to have dollars available to prevent harmful cuts to SNAP and to be able to shoulder those new food assistance responsibilities. As I was alluding to, there’s real risk of shifting funding around from other vital priorities.
Revenue is our primary bulwark against that happening. And then also candidly, for many state policymakers and the public at large. And a lot of times, just getting back to the status quo before H.R. 1 really isn’t good enough. States have a lot of their own unmet needs and priorities that folks have a lot of momentum around wanting to invest in stronger solutions for over time, things like childcare, strengthening transportation, repairing and constructing schools. And so revenues are not just about getting back to zero, if you will.
In an ideal world, they’re also about going bigger and bolder to being able to invest in the future. So that’s basically the what is focusing on revenue. I’ll spend a few minutes focusing on a little bit more on the how, which is namely that to guard against a cuts-first reaction to H.R. 1 and a significant harm that could come with it, state policymakers and advocates can prioritize three things that I’m going to touch on briefly one at a time, which are protecting revenues currently under threat, raising new revenues where possible to offset cuts, and then what I’ll describe as reclaiming revenues that states are already losing due to prior policy choices.
So the first of those is that in this world where states are facing sustained pressure, really a first order of business is to not do any additional harm, if you will, through more harmful state policies. In other words, to protect revenues that states, at least at the moment, are currently collecting. This means working in partnership with allies wherever possible to push back on emerging calls to do things like enact and expand additional sharp cuts to personal income tax systems, expansions of those private school voucher programs I was describing, as well as looking to engage on this raft of property tax cuts and caps that we’ve seen in recent years.
There’s a lot of action going on on this policy out there right now in state capitals and places like Georgia, Missouri, and South Carolina, where lawmakers are right now discussing potentially eliminating income taxes altogether, additional states where there are similarly extreme efforts to very sharply reduce or even eliminate property taxes as well. Now, on the next slide, I will just quickly highlight that while that may sound like a daunting challenge to push back against what are sometimes seen as, at first glance at least, popular policies around tax cuts, I include this slide here really just to highlight that there’s a lot of incredible work going on every day in very difficult political environments to do just that.
I’ve just pulled a few examples from people and groups that we’ve worked with all across the country to push back against harmful cuts in places like Georgia, Ohio, North Carolina, Kentucky, and Iowa, and there are many others. On the next slide, I will point out that it is also important wherever political circumstances may allow for states to really try to get bold and look at ways to raise new revenues as well through a range of tools like things like targeted tax increases on those most stable to pay, the wealthiest households and oftentimes multinational corporations.
These are policies under consideration in a few states, places like California, Colorado, Rhode Island, and Washington just this year. I will also say a little bit more on the next slide about the fact that these are policies that have also been adopted in recent years in many places. So just in the past five years, we’ve seen 11 states plus the District of Columbia take this path of raising new revenues in a targeted way to support investments. And then on the next slide, we just have a summary table of some of these policies that were enacted.
I won’t detail them for time one by one by any means, but we have resources available on this general story that we can share. Again, various policies such as personal income tax rate increases, things like reforming state capital gains taxes or corporate income taxes, in ways that have generated a significant amount of revenue for services ranging from childcare to education to transportation and others.
And then this slide is largely going to be pointing to what is essentially a follow-up resource that I would really urge people to take a look at if they’re interested in learning more about their state. This is an online tool we have that has essentially 50 state information on which revenue levers are available in your state. This link and QR code are available for folks who want to take a look after the webinar.
But people, I think sometimes when they’re thinking of state revenue might only be thinking of a small handful of options, say personal income taxes, maybe raise the sales tax, so on and so forth, but there are actually dozens of individual policies that are available on the state level, and this is the tool that can help people get started in thinking about what might be right in your case.
And then that third strategy that I alluded to earlier is what we’ve been describing as the need for wherever possible, or particularly in states that have adopted costly and regressive policies in recent years, to really think about working hard to reclaim those revenues if possible by doing things like pausing or ideally reversing some of the most costly iterations of those things such as deep income tax cuts.
That’s something that might sound like a tall order, and it frankly is, but it does have precedent. We’ve seen things such as, for example, in Kansas last decade where there was a bipartisan supermajority reversal of a really extreme tax cut experiment that had been enacted in that state. We’re also seeing some evidence right now suggesting that the public may be more open to things like pausing and reversing tax cuts than one might think. For example, there was a recent poll out of Kentucky, one of the states that has really deeply enacted significant personal income tax cuts in recent years, where only 9% of voters has said that those tax cuts were really helping them personally.
On the next slide, I just want to quickly highlight that part of the potential way of getting more people to be able to connect the dots and for policymakers to really think about the importance of revenue is in states like Kentucky, which I show as an example here, really working to paint a more aspirational and inspirational picture around revenue than people necessarily think of when they hear the word taxes in a lot of cases.
The fact that those dollars could if they weren’t going to tax cuts, for example, or other regressive policies could do things like fuel all sorts of investments that are what are shown in the Post-it Notes here on this example photo for things like childcare, education or healthcare or whatever your policy priority might be. So in just the remaining moment or two before I hand things over, I want to lift up a couple of key points about thinking about the process for how to engage in these issues.
One is that at least some of you might be thinking this sounds great, or at least this sounds interesting, or at least I want to learn more and think about how to lean in on revenue a little bit further. But then the process for doing that, the process of thinking about how state tax and budget decisions get made might look like something very much like this slide, which is a little bit of a labyrinth. And so I want to close with just a couple of points.
As lifted up on the next slide, one of the things to really know is, as I’m sure it is on the federal level, which where I’ve never really worked that much on a day-to-day basis, state houses are all going to be so much about learning the process of things like the legislative calendar, where to plug in in the budget debate for key points of inflection. I’ll leave you with one tip in a moment for doing that, but something I want to lift is that from a timing perspective, most state sessions are currently in right now.
Most states convene in the first few months of the year. And so this is really a great time right now to get involved and to think about leading in. The second is that when it comes to what I’ve been talking about here today, it’s really about engaging on the overall size of the pie available for state and local investments as opposed to just how to divide it, because the latter approach is how we wind up with some of these shifting of fund risks that I was alluding to.
As my first boss in this work sometimes put it, it’s important not just to show up at the Appropriations Committee, which is so essential, but also to show up at the Ways and Means and Finance Committees, which are where the debates are happening over where the dollars come from.
And then third and last for me, I would say a big part of the good news on these issues is that almost never should you be starting from scratch. In really every state, there’s going to be seasoned and experienced and really passionate people and allies who are going to be engaged on these issues around state fiscal policy, around taxes and spending that you can connect to to learn more and go from there. I would particularly highlight what’s called the State Priorities Partnership.
These are groups that we work very closely with and you’re about to hear from one of that are in 40 states plus DC and Puerto Rico, and they’re a great resource. And the link to access those groups and that broader network will be available as a resource. And so with that, I am yes, wrapping up with just the map here of our great network, and then I’ll be handing things over to Kelly to hear more about a West Virginia example.
Kelly Allen: Yeah, thanks so much, Wes. I heard so much there that I want to echo and dive in on from West Virginia. My name’s Kelly Allen. I’m the Executive Director of the West Virginia Center on Budget and Policy. As Wes just mentioned, the State Priorities Partnership, we’re that State Priorities Partnership group here on the ground in West Virginia. We are independent, nonprofit, nonpartisan policy research organization that focuses on tax and budget issues, which, of course, focus on everything.
And we often analyze how policy proposals or legislation or budgets impact the economic mobility and quality of life for all West Virginians. We can go to the next slide. Folks probably know, but West Virginia is a state that’s very dependent on federal programs and federal funding. I think Wes mentioned, on average, usually about a third of state budgets come from federal funding. In West Virginia, it’s closer to half. About 48% of our overall budget comes from federal funding.
So when things change at the federal level, that has a really big impact on our ability to provide and deliver services to people who need them. Here in West Virginia, nearly one in three of our residents rely on Medicaid for their healthcare, covering nearly half of all births, half of all coverage for children, about half of all working age adults with disabilities. One in five folks on Medicare also have Medicaid to supplement that coverage, and then three-fourths of nursing home residents.
It’s a little higher in West Virginia than the nationwide average, but whatever state you’re in, the numbers are probably up there for these categories as well. We are also deeply reliant on SNAP food assistance. About one in six West Virginians rely on SNAP to help put food in the table. We won’t talk much about that here today, but of course, Congress’ changes to SNAP food assistance are also going to have a major impact on West Virginia’s budget.
And as Wes talked about, like many other states, West Virginia used the temporary revenue spikes and increased federal funding that came to us in the COVID era to justify deep, harmful, and permanent tax cuts that overwhelmingly have benefited our state’s wealthiest households. Obviously, as you heard a few minutes ago, West Virginia wasn’t alone in that tax cutting spree. Many, many states did similar things, but West Virginia did cut taxes among the deepest of any state as a share of our GDP and our revenues.
Initially, when we passed big tax cuts in 2023, the increased COVID era federal match was still in place. So we were, as all other states were, we were getting an extra federal funding for Medicaid. We were getting lots of K-12 education funds. They were called ESSER funds. Childcare providers were getting these stabilization grants that gave them higher than normal reimbursements.
And all of those extra federal dollars papered over the budget holes that were created from our deep tax cuts. Another way we slashed our budget to make space for tax cuts, we had about four or five years where our state lawmakers told residents of West Virginia that we could essentially hold the budget flat forever, that the budget would no longer increase with inflation, but it would just stay at flat levels that were decoupled from inflation.
So in addition to using federal dollars to plug those holes, another way we slashed our state budget to make space for tax cuts was by moving more of our state share of Medicaid that we had to raise onto provider taxes. We can talk about that a little bit more, but states raised their share of Medicaid funding in a variety of ways, and it was mentioned earlier. One of those is through the state budget.
Another is through provider taxes. So we essentially became more and more reliant on provider taxes in recent years to fund our share of Medicaid, and now that’s backfired. So we’re either going to have to move those dollars back onto the state budget or make even deeper cuts to Medicaid than we would have to otherwise as a result of Congress’ changes. So now we’re in this really precarious moment where our tax cuts are fully implemented, that COVID era federal stimulus has expired.
And not only that, but federal funding is dramatically declining as a result of the One Big Beautiful Bill or H.R. 1 passed last summer. And now we’re beginning to see in West Virginia areas that we’ve long underinvested in are really beginning to show. West Virginia has an aging population. We’re one of the states most susceptible to natural disasters, which are driving up long-term costs.
And again, those things aren’t really exactly related to Medicaid, but Wes talked about how there are other budget pressures that are all coming together right now in states. So those are some other things that lawmakers are grappling with. And we’re also seeing other casualties of deep state revenue disinvestment becoming clear. The agency that administers SNAP and Medicaid has been warning for years that their caseworkers are extremely overextended due to low pay and budget cuts have created these extended vacancies.
So now that we have overworked caseworkers, we’re adding all this additional layers of work onto them as new work reporting requirements and responsibilities come down from Congress. We have a long wait list of families waiting for home and community-based services, more than a year in some cases. And in the state, we’ve seen historic numbers of public school closures. School districts saying they’re underserving students with special education needs due to a lack of dedicated funding.
So we’re facing a lot of structural challenges that are underpinning this moment. And we’re really here to talk about the current moment of the deepest cuts to Medicaid and SNAP in our nation’s history. If you don’t mind to go back one slide, I’m sorry. We at the West Virginia Center on Budget and Policy in a lot of ways have been the only credible source for the media, the public and lawmakers of the estimates of federal cost shifts coming to the state budget as a result of SNAP and Medicaid changes.
Okay, you can go ahead now. Our governor’s administration has refused to release internal reports that they created about how much they think federal cuts will cost the state budget. Members of the media, lawmakers have requested analyses and FOIA and have been unable to get it. So we have had to create our own estimates with help from the Center on Budget and Policy Priorities and others to really help prepare the public and lawmakers and media for these oncoming costs that are going to deeply impact the state budget.
And the other thing that’s going on right now is that proponents of tax cuts in our state are arguing that the reason we’re not seeing economic growth, that’s what proponents of tax cuts often say that they’ll lead to economic growth, but they haven’t in West Virginia. So what the proponents are saying now is, well, the tax cuts weren’t big enough yet. We have to do another one. It’ll be the next tax cut that’ll create the growth.
So they’re really pushing for lawmakers to make painful budget cuts to programs like Medicaid and public education in order to enact additional tax cuts. Okay, I think we’re ready for the next slide. So just as into the fall and winter, we’ve had to be a source, I think, for allies and partners and healthcare organizations and the media and others about the potential costs of these Medicaid and SNAP changes to the state budget.
We’ve also worked really hard to show, as Wes talked about, how state and federal tax cuts over the last decade have overwhelmingly benefited the state’s wealthiest households and have come at the cost of investments in key programs that help all households thrive.
Well, we worked with the Institute on Taxation and Economic Policy who modeled the impacts of tax changes to show that over the last decade, if you look at state and federal tax cuts combined, the wealthiest 20% of West Virginians are getting over $2.2 billion every year in tax cuts. And we contrasted that. That’s more than our state spends on the entire K-12 of education system.
The $1.2 billion that the wealthiest 5% of households are getting in West Virginia every year from tax cuts is double our state budget’s expenditure on Medicaid. So we’ve really been trying to set the stage for what Wes talked about a little bit about how we can reclaim some of these tax cuts that have overwhelmingly benefited the state’s wealthiest households to meet our state budget needs as Congress is pushing the cost of these critical programs down onto the states.
So right now in West Virginia, we’re in the last week of our state legislative session. We’re in the heat of the budget debate, and we’ve seen really disturbing budget proposals made. We’ve now seen three versions of the budget. We had the governor release one, and then each chamber, the House and the Senate, have released their own. And we’ve seen proposals to finance more tax cuts by cutting Medicaid and SNAP administrative funding outright.
A compromised version of the budget passed last week, and it cut waiver programs that help West Virginians with intellectual and developmental disabilities. It puts Medicaid services now and in upcoming years in a really precarious position by only funding it if revenues come in above expectations and the state has a surplus. So the budget that passed the House last week cuts Medicaid out of the base budget and uses supplemental or surplus allocations to fund Medicaid.
And it’s a little bit wonky, but basically what you need to know is it makes Medicaid funding precarious and only dependent on if revenues come in above expectations rather than being a part of the base budget that is guaranteed. And then we know that lawmakers are not even contemplating the coming SNAP and Medicaid costs in future years because they haven’t even seen the proposals from the governor’s office about how much Medicaid costs are going to go up as the provider taxes phase down or how much we might be on the hook for if we have to absorb a share of the SNAP benefits starting next year.
So this year we’ve worked really hard to bring health and safety net partners into our revenue battles. In prior years, we’ve often had disability advocacy organizations or healthcare advocacy organizations or K-12 advocacy organizations say that tax battles aren’t their battles, but we’ve had real success in the last few years helping our partners see that it’s all the same fight.
And to the point that Wes made, we need to align ourselves and get in solidarity with one another that we need to increase the size of the pie, not just find ourselves fighting over scraps, the folks that are worried about education funding or childcare funding or healthcare funding or disability services funding. We all need to come together and say that we need the pie to be big enough to serve all of these programs.
And just last week we brought together advocacy groups across the spectrum, healthcare advocacy organizations, SEIU, our school service personnel union, Medicaid waiver families, childcare providers, and clean water groups to call on our legislature, I think we have a picture on the next slide, to… Oh, two slides away, sorry. I’m all over the place here. To sufficiently fund our schools, our healthcare, and our infrastructure before funding additional tax cuts that would drive down the revenues needed to fund these programs.
This was one of the first times we brought together, I think, groups across a wide range of issues to say, we need to fund X, Y, and Z, all of these things, over additional tax cuts. I do want to be really candid that this work is difficult. It’s long-term work to make the case for reclaiming revenue, protecting revenue, for not going down the road of additional tax cuts until we really get our house in order and ensure that we’re sufficiently funding programs that help families thrive.
We literally just got word a couple hours ago that tomorrow our House Finance Committee is going to take up another income tax cut that will slash another 125 to $250 million in critical revenue. It’ll give the median middle income household in West Virginia a tax cut of about $1 a week. But that’s 125 to $250 million that is not available to fund Medicaid, to clear the IDD waiver wait list, to increase investments in public schools, and do any number of additional things.
So this is really a long battle. I think it’s a multi-year effort, and it’s going to take us some time to really push back against these efforts to undermine the revenues that fund public services. But we are seeing, I think, the fruits of the labor and we are seeing organizations across lots of interest come together and say that there has to be a better way to do this and that we have to fund these critical services and take a revenue-first approach. I don’t know that we have all the tricks figured out.
I don’t know that we’ve mastered it. We’re looking at, again, another tax cut this week in West Virginia when we don’t have our house in order, when we haven’t fully funded our Medicaid program or our schools or even begun to grapple with the costs that are coming on to our state budget in upcoming years for Medicaid. But we’re proud to have brought so many people together and to keep pushing back and to just keep moving the ball forward on helping folks understand the importance of these programs.
Yasmin Peled: Great. Well, thank you so much to Wes and Kelly for joining us today. We’ve got some time for Q&A, so I’ll put another plug to folks. If you’ve got questions, please use the Q&A function in the Zoom control panel. I’m going to start with a question here that I think is related to the MCO tax, Kelly, and the limitations in H.R. 1 on using provider taxes.
What are states doing to address that diminishment of revenue? And since H.R. 1 is really restricting state options, what’s going to happen with… I think, Kelly, you mentioned that West Virginia is newly reliant on a lot of provider taxes and now that option is going away. And so if you could respond.
Kelly Allen: Yeah. I mean, I think one of the ways, as I mentioned earlier, that West Virginia was able to do deep tax cuts was by offloading a lot of the cost of Medicaid off of the state budget and really increasing our reliance on the provider tax. And that’s coming back to bite us now as that’s phased back in. We estimate that I think starting next year, it’s going to reduce state Medicaid funding by about $30 million.
And then as it’s stepped down, it’s going to be over $178 million by 2031, which that’s 10% of our state Medicaid share. And of course, that times four, because if you don’t replace that revenue, you forfeit that in West Virginia three to one federal match. And unfortunately, our lawmakers have not grappled with that. Our governor’s administration does release a long-term budget forecast.
They call it a six-year financial outlook where they say what budget expectations they have in upcoming years, and they didn’t mention the reduction of the provider tax in that outlook, which I guess indicates that from the governor’s perspective, they would just eliminate that funding and they aren’t expecting to bring it back onto the budget, but that would mean incredibly huge cuts to Medicaid.
And we know, as you all discussed and Natalie talked about, that puts optional services like home and community-based services, dental benefits, and lots of other really important services right in the crosshairs. So we’re deeply concerned that our policymakers don’t seem to be grappling with this and, in fact, are talking about forfeiting additional tax revenues this year in this moment of uncertainty.
I hope there are other states that are thinking about it more. But I think as advocates, it’s really on us to make sure our policymakers are really as aware as possible of what’s happening. And I think folks at CBPP, Wes’ colleagues, can probably help folks that are interested in what the fallout and the fiscal impacts in their state would be. Because in some cases, it’s very much us educating our lawmakers on this.
Yasmin Peled: Thank you. A question here about revenue and maybe another strategy that wasn’t discussed, Wes, but a question here is about could states increase revenue by attracting more industry to their states, new companies?
Wesley Tharpe: Yeah, sure thing. And I appreciate this question. So this is something that I would say yes and no to, in that the yes part is that in an ideal world, when states are growing economically, they’re retaining residents they have, attracting new ones on a year-to-year basis. They have things like small business growth, new industries coming in. That kind of economic prosperity that any state wants to have is a big revenue driver in its own right.
For example, if you look at states that are considered to be some of the states that have grown more quickly in recent years for a variety of reasons, places like Texas, Georgia, Oregon, Colorado are coming to mind, those are places where just those underlying, that churn and economic growth is causing those states to bring in decent amounts of revenue on a year-to-year basis.
Here’s the no part though and here’s where it gets challenging, which is a lot of the tools that states tend to turn to to try and proactively attract new industries, to try to proactively bring in new manufacturers tend to be things that wind up being fairly major revenue losers overall and in the long run. These are things like really costly state tax breaks and subsidies for chosen industries.
Sometimes experimenting or almost gambling a little bit with state dollars on unproven economic development schemes that might sound good at first glance, but then aren’t really based in a lot of evidence. And so what you wind up having is those sorts of tools as well as state tax cuts tend to get overvalued in the conversation around state prosperity. And what gets undervalued in the conversation around state prosperity are the sorts of investments that are equally important that those revenues could have gone to.
So those are going to be things like an educated workforce, people having access to local services, health services, functioning infrastructure. We tend to really lift up what I think is the mainstream evidence and research on this, that states tend to be well-served when they’re looking at the full board, if you will, of how to have a prosperous state, which is you don’t necessarily want taxes to be way outside the norm or confiscatory in some way, but that the bargain-basement approach to state economic growth also doesn’t work that you really have to think about the importance of those revenues as well.
Yasmin Peled: There’s a couple questions here that I’m going to combine into one maybe big overarching question that might be our last one here that’s about communicating about these issues. These potential cuts to Medicaid, HCBS, SNAP in a way it’s intentional, right? It was intentional in H.R. 1 to have this massive change in funding Medicaid and SNAP and now funding tax cuts.
So that was all intentional, but how do you break through in communicating that? Maybe Kelly, you can start from West Virginia’s perspective. How can you get the general public on board with that and then move them into how to advocate for these revenues and the movement building that comes with this?
Kelly Allen: Yeah. I mean, I can try to start. We have been on the ground in a lot of rural communities throughout West Virginia, we’re a very rural state, so that’s most of them, since H.R. 1 was first being debated more than a year ago. I mean, I think something that struck me was in these communities, there are places that faced the loss of industry and then waves of public school closures, and now their hospitals and clinics are really at risk of being lost.
And those are the largest employers in rural places, your school district, your hospital, your healthcare provider. So I think for a lot of folks, it’s an issue about care, about how we care for the people that we love the most, but it’s also really an economic issue. We often say that the Medicaid expansion is the best thing West Virginia has ever done for economic development in terms of the healthcare jobs that it’s created.
So I think just one other thing I’ll say is when we first started going out in communities and talking about this over a year ago, people did not believe that Medicaid would be cut or SNAP would be cut. And they thought we were being, I think, alarmist or hyperbolic. And we’ve gone back since H.R. 1 passed and there’s still questions about whether people that they love will be impacted, because this is all being implemented over such a lengthy process.
I mean, for us, we just keep showing up. We’re building relationships with people. In some ways, people that showed up to argue with us, but we are keeping that conversation going. And I think it really is just about showing up as people start to see the impacts and as we can help them connect the dots about the importance of these programs, not just for their loved ones, but for their hospitals, whether they rely on Medicaid or not, for their economies.
And yeah, for us, it’s just to keep showing up and having conversations with folks and helping mitigate the harms as much as possible and helping do that advocacy to ultimately see them rolled back.
Wesley Tharpe: Yeah. And I can share just a little bit, which is I would say one thing that I draw a lot of inspiration on in my work and in my experience working in the states and working with our network of state partners is a lot of work that is done sometimes in really incredibly politically difficult environments, but on some of these issues, almost any political environment is going to be at least tricky to navigate, is thinking about what is the broader vision and the broader aspirational call around just what sort of society we want to live in.
Like on the federal level, what sort of nation we want to be. But also when we’re thinking about state policymaking levers, we all have a place we call home. We all live somewhere. And people tend to be really passionate in state capitals and in the voting booth around what can West Virginia really be at its best? What can Colorado or Georgia or Vermont be at its best?
And I think we tend to, and I can be as guilty of this as anyone else, as advocates and voices sometimes starting with our chosen priority policy and going from there rather than necessarily starting with a unifying vision and then working backwards into what are the set of policies that are needed. I work on tax policy for a living. I never remotely imagined that’s what I would build a career out of when I was coming up at younger ages and earlier stages in my career.
But one of the benefits of engaging on these issues is that they can be unifying across people who care about health coverage, disability services, public education, transportation, childcare, any number of issues that fiscal policy can really tie it together.
And it is at least one path of talking about and thinking about what is an alternative vision for what we’re trying to do here together that is a significant contrast to that vision that has been dominant, unfortunately, through federal policymaking here for the better part of the past year and a half. And so that’s some thinking that I have on how I think about that and the path forward.
Yasmin Peled: Great. Well, thank you again. Oh, Natalie, did you want to…
Natalie Kean: Well, I was just going to add on that, that something we’re trying to do is to connect all the dots and keep the eye on the ball and on who’s responsible and who has agency and choice in this matter. And it’s your state legislators and Congress and the administration and make sure we’re holding them accountable to help us bring our vision to reality. There’s a lot of different attacks happening on Medicaid right now.
At least the rhetoric is different, trying to tell us that there’s some sort of problem with the Medicaid program and home and community-based services and that spending is out of control. That’s not true. We know that’s not true. What they’re doing is trying to distract us from the cuts and provide cover for these cuts that we’re facing.
And so I think it’s important those of us coming from the Medicaid and aging and disability advocacy side to keep connecting those dots, saying the tax cuts are in contrast. The tax cuts are helping the wealthy and are in contrast to the cuts to benefits for the rest of us. I think it’s just important that we keep saying that even if we don’t have to become tax experts like Wes and Kelly, but to keep that messaging point upfront.
Yasmin Peled: Well, I think that’s a good place to wrap up today. So thank you again to all of you for joining us today and thank you to our presenters. As a reminder, feel free to reach out to any of our speakers with additional questions that you might have. And please don’t forget to complete the post-webinar survey. Your feedback on these webinars is very important to us. Thank you so much and have a great rest of your day.
