U.S. Senate Majority Leader John Thune, R-S.D., right, and Speaker of the House Mike Johnson, R-La., hold a press conference on the Republican budget bill at the U.S. Capitol on April 10, 2025 in Washington, D.C. (Photo by Kayla Bartkowski/Getty Images)
Congressional Republicans are working to extend President Donald Trump’s 2017 tax cuts by cutting spending on safety net programs, including Medicaid and SNAP, which helps low-income families buy food. These cuts would also carry major ramifications for state budgets around the country.
If Congress follows through with its spending cuts, Minnesota could lose out on hundreds of millions of dollars annually, forcing cuts to programs that serve elderly, low-income and disabled Minnesotans.
Minnesota, however, has slightly less at stake than other states. Around 32% of the state budget comes from federal dollars, mostly for Medicaid. The national average is 36%, and in some states like Missouri, Montana and Wyoming, the federal government covers nearly half of the budget, according to data from Pew Charitable Trusts. Half of Louisiana’s state budget comes from federal funding.
Medicaid pays for health care for the elderly, low-income and disabled. The cost is shared between states and the federal government; last year, Minnesota spent $18 billion on Medical Assistance, which is Minnesota’s version of Medicaid. The federal government covered $11 billion of that.
A tax bill passed by Republicans in the U.S. House would cost Minnesota around $500 million annually in lost Medicaid funding, though it is still far from becoming law. A Senate version of the bill released Monday would make even deeper cuts.
Minnesota is already facing a looming deficit; while lawmakers took steps in the 2025 legislative session to rein in spending over the next two years, they’re expected to make another round of cuts when they write the next budget in 2027.