Will Uncle Sam pass some SNAP costs to Arkansas?

By STEVE BRAWNER

If the debt-ridden federal government were to pay $55 million a year less for Supplemental Nutrition Assistance Program benefits in Arkansas, could the surplus-running state government make up the difference? And would it?

Those questions would have to be answered if Congress passes the Senate version of the One Big Beautiful Bill Act (OBBBA).

The OBBBA’s primary purpose is to extend the tax cuts passed by lawmakers in 2017 during the first Trump administration, and to add new ones. Many of those 2017 cuts expire this year. 

Congress has been considering spending cuts to partially offset the budget impact of extending the tax cuts. One would shift some of the Supplemental Nutrition Assistance Program’s costs to the states. SNAP is still commonly known as food stamps. 

The change is being considered first by the Senate Agriculture, Nutrition and Forestry Committee. It is chaired by Arkansas’ Sen. John Boozman. 

As of Thursday morning, senators have been considering states paying for 75% of SNAP’s administrative costs. That amount would be an increase from the 50% they currently share with the federal government. States also would begin covering more of the food benefit costs, with the amount based on their payment error rates. This would provide an incentive for them to reduce underpayment and overpayment errors. As reported by the Arkansas Democrat-Gazette, the proposal also would extend the work requirements for SNAP beneficiaries up to a maximum age of 64 – it’s currently 54 – while exempting parents whose children are younger than age 10. 

The liberal-leaning Center on Budget and Policy Priorities says the Senate version would reduce Arkansas’ SNAP funding by $55 million, based on the state’s 2023 payment error rate. States that didn’t want to pay the cost difference could cut spending or opt out altogether.

The House of Representatives has already passed a similar but not identical version, so the two would have to match one way or another. Anything that passes probably will do so with only Republican support. The goal is to get something to President Trump’s desk by July 4. That seems unlikely, but things can happen suddenly in politics – or take forever. 

If the SNAP cuts remained, costs would shift from the federal government, which is $36.2 trillion in debt, to state governments. Many of those, including Arkansas, have run budget surpluses in recent years and have rainy day accounts.

There are several reasons why those surpluses exist. Those include the fact that, unlike the federal government, all states other than Vermont have legal mechanisms leading to balanced budgets. In Arkansas, those include the Revenue Stabilization Act, which since its creation in 1945 has provided a framework for prioritizing spending into categories. Lawmakers have renewed it and abided by it.

Another reason is that states have relied on federal dollars to pay for many services, including SNAP. There was a huge influx of those dollars during COVID. That money has helped state leaders cut taxes and pass balanced budgets without having to make some really tough spending decisions. Meanwhile, the federal government has paid for all this by running deficits, which it can legally do, thereby increasing the national debt. 

It’s been a winning combination for everyone, except for future generations.

If the proposed SNAP changes pass, Arkansas would try to reduce its payment error rate. Regardless, it definitely has $55 million in the bank. In fact, the state had a $232 million fiscal year surplus at the end of May with one month left. It has $2.18 billion in its Restricted Reserve Fund and $1.81 billion in its Catastrophic Reserve Fund. It recently drew $90 million from its Restricted Reserve Fund to pay for private and homeschooling costs under Gov. Sarah Huckabee Sanders’ LEARNS Act.

That brings us back to the second question at the top of this column – not “could” Arkansas avoid cutting SNAP benefits, but “would” it? Food stamp beneficiaries do not have the most powerful lobbyists, and not all Arkansans support this kind of program to begin with. On the other hand, lawmakers don’t want to harm people in genuine need. Probably they would reduce spending some, but they would not slash it.

At the federal level, it’s almost certain that lawmakers will pass the OBBBA’s big tax cuts, while not cutting spending by nearly as much.

That is the way things have worked for a long time. Again, there are fewer losers that way, other than future generations. 

Steve Brawner’s column is syndicated to 19 outlets in Arkansas. Email him at brawnersteve@mac.com.