States Fight Back: Shielding Budgets from Federal Cuts
The passage of 2025 HR1, the so-called Big Ugly Bill, shifted significant financial responsibility for critical social programs, such as Medicaid and SNAP, directly onto the states.
Compounding this is the administration's repeated use of executive overreach, often threatening and withholding congressionally approved funding from states. This has been applied widely, impacting funding for everything from wind power projects and climate resilience to post-pandemic K-12 school resources. According to Delegate David Moon, this delay tactic is a strategy to essentially deny states access to lawfully owed funds for years.
The Policy Response: State Debt Collection
In response to this two-pronged fiscal assault, states are moving beyond legal challenges. They are introducing innovative legislation rooted in standard debt-collection practices to mitigate the impact of illegally frozen federal funds.
This legislative push involves two key strategies:
As New York State Senator Jessica Ramos notes, the goal is to equip governors with "the strongest possible tools" to protect residents and ensure essential programs for housing, climate resiliency, and mental health are not undermined by political battles over taxpayer dollars.
The following legislative brief details these bills, showing the legal and financial how. It also includes exclusive interview excerpts from two bill authors to provide the why behind this policy movement.