July 10, 2025
Many thanks to our government relations consultant Marcy Savage for preparing a summary from today’s Fiscal Policy Institute Webinar from 12-1:30!
———- Forwarded message ———
From: Marcy Savage <marcys@lobbywr.com>
Date: Thu, Jul 10, 2025 at 1:11 PM
Subject: Summary of Today’s FPI Federal Budget Briefing
To: Lauri Cole <lauri@nyscouncil.org>
Fiscal Policy Institute Briefing and Report on the Federal Budget
On July 10, the Fiscal Policy Institute held a Briefing and Overview of the Federal Budget Reconciliation Bill (One Big Beautiful Bill Act – OBBBA). The OBBBA will increase the federal deficit by $3.3 trillion over the next ten years through income tax cuts and tax credit increases. 70% of the tax cut benefits are estimated to accrue to the wealthiest households.
OBBBA Spending Cuts
· Medicaid & ACA – $1.1 trillion
· IRA Climate Provisions – $569 billion
· Student Loans – $278 billion
· SNAP – $189 billion
State and Local Tax Deductions (SALTs)
Higher SALT cap delivers small benefit to few households. Most taxpayers earning under $305,000 get no benefit from the SALT deduction. The maximum benefit of the SALT deduction is $3,200 for taxpayers earning between $450,000 and $500,000. There is no SALT deduction benefit for taxpayers earning more than $530,000.
Fiscal Costs for New York
Major Healthcare Impacts
New York’s state budget costs for health care will be cut by $8.4 billion. Non-state budget costs of $12.7 billion (federal funds that will be discontinued). A return to pre-ACA levels of uninsurance are expected due to ~1.5 million who will lose their insurance. These impacts are anticipated to begin by January 1, 2026.
Essential Plan Impact
Provides coverage to 1.6 million low income people who are ineligible for Medicaid. U.S. citizens and immigrants between 138% and 250% of FPL and lawfully present immigrants 0-138% of FPL. OBBBA will disqualify most immigrants for Essential Plan.
MCO Tax Impact
MCO Tax will be eliminated likely 1/1/26 resulting in an annual loss of $1.6 billion.
Work Requirements & Other Medicaid Eligibility Impact
OBBBA requires states to implement burdensome eligibility checks including working requirements and more frequent redeterminations. These impacts are primarily expected to affect the “ACA expansion” population. These functions are expected to cost the state $500 million to implement. NYS estimates that these requirements may kick 1.2 million people off of Medicaid. These changes are currently schedule for 1/1/26 although implementation is unlikely before that date.
NYS Hospital System at Risk
Uninsurance is expected to disproportionately impact safety net and rural hospitals. FPI estimates potential job losses of 215,000 across the labor market and potential for dozens of hospital closures.
State-Level Decision Points
· How do we avoid coverage losses? A dramatic increase in uninsured will just shift costs. Coverage losses likely to be concentrated among healthier people who are relatively affordable to insure.
· How do we support safety-net hospitals? The state needs to support safety-net hospitals in order to keep them open.
SNAP Impacts
· Benefits cost sharing requires states to pay for up to 15% of SNAP benefits which is expected to increase costs by $1.1 billion (start date 10/2027)
· Administrative cost shraing will increase states’ share of admin costs from 50% to 75% and is expected to increase costs by $266 million (start date 10/2026)
· Eligibility restrictions (time limits/work requirements) will result in NYers losing benefits (immediate start date)
FPI Policy Recommendations – Revenue Raisers
· Personal income tax increase ($5-$10 billion)
· Corporate tax ($9 billion)
· Sales tax on services ($17-$25 billion).
FPI also notes the state’s current fiscal reserves which could be utilized as a stop-gap measure, but not a long term solution to budget shortfalls.
Prior to its enactment, the Fiscal Policy Institute prepared an analysis of the “One Big Beauitful Bill Act” which you may view/download here.