By DAVID A. LIEB, Associated Press
New Mexico lawmakers are to open a special session Wednesday to boost funding for food assistance and rural health care — actions the Democratic governor contends are needed to “minimize the damage from President Trump’s disastrous bill” cutting federal taxes and spending.
The special session follows one in Colorado, where the Democratic governor asserted Trump’s tax cuts wreaked havoc on the state’s budget. Oregon’s Democratic officials also are wrestling with whether a special session is needed. And California Democrats recently passed new spending measures meant to counteract Trump’s big bill.
Nothing like that is happening in Republican-led states.
The diverging responses highlight the partisan schism over Trump’s signature legislative accomplishment of his second term and raise the question: Are Republican-led states ignoring the financial fallout, or are Democratic-led states overstating the urgency?
“Probably Democrats are doing a little bit for grandstanding,” said Steven Rogers, an associate political science professor at Saint Louis University who focuses on state governments.
“On the Republican side, they may also just be OK with it — or they don’t want to poke the Trump bear,” Rogers said.
The sweeping new law, dubbed the “One Big Beautiful Bill Act” by Republicans, is likely to affect some states more than others. Federal tax cuts could reduce revenues for states that link their own income taxes to the federal code, starting with 2025 tax returns.
Federal spending reductions on Medicaid and food benefits also could cause states to spend more of their own money on social safety net programs. But new Medicaid work requirements, which are among the most prominent changes, don’t begin until 2027. Administrative cost shifts to states for food stamps begin in October 2026, with additional performance-based cost shifts in subsequent years.
New Mexico officials are taking ‘proactive’ steps
Democratic Gov. Michelle Lujan Grisham has called upon New Mexico lawmakers to preemptively earmark more money this fiscal year toward food assistance and rural health care.
Lawmakers also are looking to expand state subsidies for health insurance policies bought through the Affordable Care Act exchange, which covers about 75,000 residents. They point to the potential for enhanced federal subsidies to expire at the end of this year.
“We’re not going to sit idly and watch that disaster happen,” said Democratic state Senate Majority Leader Peter Wirth.
Though New Mexico expects to lose about $200 million annually because of new federal tax cuts, starting this fiscal year, it still has a large surplus thanks to booming oil production.
“We’re in a position fiscally to be able to be proactive,” Wirth said, “and really try and hold New Mexicans as harmless as we can to these cuts that are coming.”
California boosts spending for food programs
Legislation recently signed by Democratic Gov. Gavin Newsom provides $255 million for California’s response to Trump’s big bill and other federal policy changes. That includes $84 million to try to reduce errors in benefit payments in the Supplemental Nutrition Assistance Program. Those food benefits currently are fully covered by the federal government, but states with error rates greater than 6% could have to pay part of the cost starting in October 2027.
Trump’s big bill also expands work requirements for adults participating SNAP, which is expected to force some people off the program in the coming months. The California legislation provides $40 million for counties to implement the new SNAP requirements and pumps $20 million into emergency food banks, a one-third increase over previously approved state funding.
“We have been as diligent, as strategic as we can to backfill as much of those dollars as we can,” Assembly Speaker Robert Rivas, a Democrat, told The Associated Press.
The new spending comes as California budget officials warn of a looming multibillion-dollar deficit.
Colorado and Oregon cite tax cuts as a cause for action
Because their tax codes are closely linked to the federal one, most of the new federal tax breaks automatically apply to state income taxes in Colorado and Oregon.
In August, Democratic Colorado Gov. Jared Polis became the first to call lawmakers into special session while citing Trump’s bill. His administration said the federal tax cuts blew an estimated $783 million hole in the current state budget.
The Democratic-led Legislature filled part of that gap by eliminating some corporate tax breaks and authorizing the sale of state tax credits to raise revenue.
In Oregon, Democratic officials are weighing whether to decouple from some of Trump’s tax changes to avoid losing hundreds of millions of state tax dollars. Such a move could allow the state to continue taxing tips and overtime wages.
“It is a very politically risky bill to pass, let alone have a special session again for ANOTHER tax vote,” Democratic state Rep. Rob Nosse said in a recent newsletter. “But at the same time it will allow us to stave off some of the cuts coming to health care and to food stamps.”
Republicans see no urgency from revenue losses
Like Colorado and Oregon, the Republican-led states of Iowa, Montana and North Dakota also use “federal taxable income” as the starting point for their state taxes and automatically incorporate federal tax changes. Yet officials there haven’t raised major concerns.
Montana stands to lose an estimated $114 million annually as a result of the new tax cuts. But lawmakers likely can wait until their next regular session in 2027 to address any impacts, said Republican state Rep. Larry Brewster, chair of the Legislature’s interim revenue committee.
“I think it’s a concern, but I don’t think it’s an urgent problem for us,” he said.
Leaders of the North Dakota Legislature, which isn’t scheduled to meet until 2027, are discussing holding a session early next year, but not because of federal tax cuts. Rather, lawmakers would decide how to spend the state’s share of $50 billion of rural health care grants included in Trump’s big bill.
Iowa’s conformity to the federal tax code could cost its general fund $437 million this fiscal year, according to the state revenue department. The state’s finances also could suffer from Trump’s trade war with China, a top export market for farmers. The state still has billions of dollars in reserves.
“We’re in a good position to weather some of the ag and some of the effects of the One Big Beautiful Bill,” Republican Gov. Kim Reynolds said, “but we also have to be mindful as we move forward.”
Associated Press writers Jack Dura in Bismarck, North Dakota; Hannah Fingerhut in Des Moines, Iowa; Morgan Lee in Santa Fe, New Mexico; Trân Nguyễn in Sacramento, California; and Claire Rush in Portland, Oregon contributed.
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