WASHINGTON, D.C. – The Republican-controlled Congress is moving forward with budget plans that would extend and enhance tax cuts prioritized by the White House. Safety-net programs would be overhauled to offset lost government revenue from those tax cuts, and in some cases, program costs would be shifted to state governments. A South Dakota expert looks at the potential impact.
A budget plan taking shape in Congress is getting attention for tax cuts for some and reductions for safety net programs for others. Policy experts in South Dakota also track what changes would mean for state government spending. The GOP-led proposal cleared the House last week by a slim margin, with all eyes now on the Senate for action.
Programs like the Supplemental Nutrition Assistance Program, or SNAP, would be overhauled to offset proposed tax cut extensions for wealthier Americans. Advocates say new work requirements would reduce access to benefits. States would also have to absorb more program costs. University of South Dakota’s Ed Gerrish says there’s a key factor to consider.
This means that if states have to contribute more to cover SNAP but don’t have the money, their budgets would have to be cut elsewhere. Gerrish says it depends on the state, but he predicts South Dakota would simply reduce the scope of its SNAP program. South Dakota just passed a budget slightly smaller than the previous spending plan due partly to dwindling sales tax revenue.
There’s also proposed Medicaid changes, and the Congressional Budget Office says several million people could lose health coverage over time. Gerrish says if those people were to file for bankruptcy because of unpaid medical bills, the state would likely have more court expenses on its hands.
Some provisions wouldn’t take effect until at least 2026. With a sunset date looming, backers of extending and expanding 2017 tax cuts for the more monied population, say there is urgency in generating economic activity that will benefit everyone. Gerrish says that could help with South Dakota’s sales-tax collections, but he notes these moves prevent income taxes from increasing again. Provisions that would enhance tax cuts are mostly temporary.
