News

June 13, 2017

Proposed Federal Budget Would Shift $700M in Hunger Cost to PA

A newly released report by the Center for Budget and Policy Priorities described the impact President Trump’s proposed budget would have on hunger and state budgets. Below is an excerpt from the report, with state-level details by the Pa. Budget and Policy Center.  Click here for an analysis for its impact in Pennsylvania. 

The Supplemental Nutrition Assistance Program (SNAP, previously known as food stamps) has sharply reduced severe hunger and malnutrition in recent decades, and SNAP reduces the depth and length of recessions by expanding automatically when need rises, bolstering consumer demand in a weak economy.  President Trump’s 2018 budget proposal would undermine this success by ending SNAP’s status as a national program and shifting more than $100 billion of SNAP costs over the next decade to the states by forcing states, for the first time, to pay a share of SNAP benefit costs — 10 percent starting in 2020, rising to 25 percent in 2023 and beyond.  The budget also would give states new flexibility to cut SNAP benefit levels to “manage their costs” ― flexibility that many states would likely use.  The result: more people at risk of hunger and harsher, more damaging, and longer economic downturns.

In Pennsylvania, this would mean shifting $4.7 billion in costs to our state over 10 years, according to the Pa. Budget and Policy Center.   “To put this cost in perspective, a cut of this size is MORE than what we spend in the state budget on all county assistance services for the entire state of Pennsylvania on an annual basis and is twice what we spend annually on the Department of Environmental Protection. Given the size of this cost shift, our state would have no other choice but to drastically cut back benefits for SNAP participants – which they would be allowed to do under the proposal to manage their costs – or cut state funding for other critical programs, or raise taxes, (or some combination of these three options).

“Pennsylvania legislators are already struggling to balance our state budget with a nearly $3 billion budget shortfall projected this year. Even if states like Pennsylvania are able to pay an average of 80 percent of their required share, SNAP benefits would fall by more than $25 per person per month on average.”

SNAP benefits have been federally financed since the program obtained its current structure more than 40 years ago, in part to help address regional disparities in hunger, poverty, and resources by ensuring that low-income households have access to adequate food regardless of where they live.  This funding structure has also helped keep hunger low during recessions, when states’ balanced budget requirements typically prompt them to cut services for the needy even though more people need help.

STATES ARE IN NO POSITION TO ABSORB MORE THAN $100 BILLION IN NEW COSTS OVER THE NEXT DECADE WITHOUT CUTTING SNAP BENEFITS.States are in no position to absorb more than $100 billion in new costs over the next decade without cutting SNAP benefits and taking other steps that could increase hunger and hardship.  The cost shift would:

  • Impose a significant new cost on states.  The annual cost shift to states would equal about $17 billion to $18 billion a year once fully implemented, the Administration estimates.  To put these costs in perspective in terms of state budgets, 25 percent of SNAP benefits in Texas — about $1.3 billion per year — is roughly equivalent to the state’s share of the annual salaries of 64,000 of the state’s teachers.
  • Force states to cut spending, raise taxes, or both — and especially to cut benefits and services during recessions.  States must balance their budgets each year.  To absorb large new SNAP costs, they would need to either cut services and programs on which their residents now depend or generate new in-state revenue (or some combination of the two).  The impact would be greater in recessions, when declining state revenues typically force states to cut spending in order to meet their balanced budget requirements.
  • Hit states at a time when their revenues cannot meet existing needs, let alone absorb new costs.  Most states are struggling to balance their current budgets, even before any federal cost shifts.  Two-thirds of states are facing or have addressed revenue shortfalls for this year, next year, or both.  Plus, many states still haven’t yet fully recovered from the Great Recession.  For instance, the average state has cut funding for higher education by 18 percent per student since before the recession, after adjusting for inflation.  In the longer term, significant structural weaknesses in state revenue systems will limit states’ capacity even to keep up with existing needs.
  • Compound the damage to states from other massive cost shifts in President Trump’s budget.  In total, the budget would shift as much as $453 billion a year to states and localities once the cuts were fully implemented in 2027 — an amount equal to roughly 37 percent of state general fund budgets that year.  For context, states now spend 35 percent of their general fund budgets on K-12 education.

Read more. 

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