The Federal Budget Will Impact State and its Families
As May is upon us, it is the time of year when the state budget picture begins to clear as state legislators put the finishing touches on the budget for the fiscal year beginning on July 1.
This year, however, that picture is still very blurry due to uncertainty about the federal budget being written in Washington, D.C. Now, you may wonder what the federal budget has to do with the state’s budget. The fact is that a good portion of the state’s dollars to spend come back to Oklahoma from our federal tax dollars we send to Washington.
Last year, the U.S. Census reported that Oklahoma’s state government received 43% of its 2022 revenue from federal dollars. Oklahoma generally gets more money as a percentage of its budget than most states.
Recently, with recent federal allocations under the American Rescue Plan Act (ARPA), the total actually approached two-thirds of state spending being federal funds. ARPA expenditures were mainly one-time use projects.
This has allowed state lawmakers to keep Oklahoma’s tax rates, already some of the lowest in the nation, even lower while still providing the services Oklahomans need and expect from state government.
All that may be about to change. President Trump’s budget proposal, and those working their way through Congress, would sharply cut federal government spending, including that which goes to the states. In a number of cases, congressional leaders in Washington want the states to pick up more of the tab, especially in regard to Medicaid, the federal and state-funded health coverage program for the poor.
In 2020, Oklahomans voted to expand Medicaid to adults aged 19-64 who earn at or below 138% of the federal poverty level. This expansion was placed in Oklahoma’s Constitution. It is not optional for state legislators: they must abide by the state constitution. If Washington reduces the amount of money allocated to the states for Medicaid, Oklahoma state lawmakers have no choice but to move money from other functions to meet the constitutional requirement for Medicaid coverage.
To put how important Medicaid is to Oklahoma families and children, more than a million Oklahomans are on Medicaid – a quarter of the state’s entire population, and more than half of Oklahoma Medicaid recipients are children. Federal cuts to Medicaid will hit Oklahoma kids the hardest because there is no state constitutional requirement that Medicaid for kids be covered.
So, what kind of cut is looming, just in Medicaid? The U.S. House of Representatives proposal could mean as much as $800 billion cut from Medicaid. The U.S. Senate proposal is not quite so draconian, but we can likely expect a Medicaid cut, which will hit children more severely.
Medicaid is not the only child-focused federal program on the chopping block. In 2023, more than half of all federal spending on children (57 percent) went toward Medicaid, Children’s Health Insurance Program, Supplemental Nutrition Assistance Program, Head Start, Temporary Assistance to Needy Families, the Child Tax Credit, and the Earned Income Tax Credit – all facing cuts under current federal budget proposals. Cuts to childcare and Head Start would mean families would have to pay more for childcare when parents work, cutting into family incomes.
State lawmakers already have less state money to spend this year than last, even without federal cuts or a proposed state income tax cut being championed by the governor. Our state legislators have an enormous task ahead of them. Now is the time to reach out to federal lawmakers and make sure they know Oklahoma’s children need to be as protected as possible from the budget storms coming from our Nation’s Capital.
To get the contact information for Oklahoma’s federal congressional delegation, go to
https://tinyurl.com/OKFedLeg
