By Patrick Lohmann, Source NM

A top budget adviser to New Mexico lawmakers Wednesday laid out the most detailed look he could muster on what the Senate budget reconciliation bill could mean for New Mexico, particularly when it comes to federal spending on health care and food aid here.

Legislative Finance Committee Director Charles Sallee’s presentation was to a special state legislative committee grappling with expected federal cuts. It comes a day after the United States Senate narrowly passed the “Big, Beautiful Bill,” which contains steep cuts to Medicaid and food stamps payments over the next decade. The bill is now in the U.S. House.

Sallee said the Legislature’s approach in recent years of parking record oil and gas revenues in interest-earning reserve funds has insulated taxpayers from a devastating blow to the state budget. Despite that, the state cannot afford to “backfill” all the expected losses, and his team of analysts is only beginning to try to calculate the many indirect economic implications of the cuts, including to farms, hospitals and the state’s overall financial health. 

“I think fiscally, we’re in the best shape to be able to handle this,” Sallee said. But nonetheless: “There’s a lot of uncertainty.”

New Mexico Health Care Authority Secretary Kari Armijo told the same committee Tuesday that as many as 88,530 New Mexicans will lose their Medicaid coverage due to provisions in the bill. The bill will also likely cause 58,180 New Mexicans to lose their Supplemental Nutrition Assistance Program benefits, she said. 

Those are significant cuts in the state that has the highest per-capita percentage of SNAP recipients and Medicaid recipients in the country. About one in four New Mexicans gets SNAP and about two in five New Mexicans are on Medicaid. 

The Medicaid cuts would mean more than 10% of 878,000 New Mexicans who currently rely on Medicaid would lose their coverage. The SNAP cuts would mean about 13% of 463,000 SNAP recipients would lose their food benefits. 

In addition to those who lose their coverage or benefits outright, hundreds of thousands more will see benefits reduced or increased paperwork or other burdens, including work requirements, Armijo said.

Sallee tailored his presentation Wednesday to how the bill in its current form could affect state coffers and also detailed the federal budget deficit that Republican members of Congress say they’re trying to address with the cuts. Even with the lawmakers’ efforts to rein in spending, a Congressional Budget Office estimate concludes the bill will add $3.5 trillion to the national debt over the next decade. 

Sallee stressed that lawmakers need to look closely at when certain provisions of the bill go into effect and consider the long view of the cuts, which are phased in over years in some cases over the course of a decade, as they consider the state’s response. 

Lawmakers will have to figure out how the state will respond to caps on provider taxes and Medicaid reimbursement that will hit rural hospitals especially hard, Sallee said. 

At least 15 rural New Mexico hospitals are vulnerable to closure due to provisions in the reconciliation, Democratic senators said in a letter in June to President Donald Trump. Six to eight of them could close here within 18 months, advocates and hospital executives said last month. 

The House and Senate will have to reconcile their different methods of reducing Medicaid reimbursement rates and provider taxes states use to increase the federal share of Medicaid payments, Sallee said Wednesday. 

The Senate version reduced the tax limit by half a percent beginning next year, whereas the House version prohibits new provider taxes. The Senate version similarly phases in reductions in reimbursement rates versus the House’s approach, according to Sallee’s presentation. 

As for SNAP, uncertainty looms about whether New Mexico’s “error rate” will help or hurt it in the end, Sallee said. 

The reconciliation bill seeks to impose a share of administrative costs, as well as the cost of the benefits themselves, on states, with a higher percentage of that cost-share imposed on states that have a high degree of overpaying or underpaying SNAP benefits. New Mexico’s rate is about 14.6%, according to recent federal Agriculture Department estimates. 

The House version of the bill would make states pay between 5% and 25% of the benefit costs, plus 75% of administrative costs for SNAP, based on the error rate. A Senate version from mid-June reduces the benefit costs borne by states to between 5% and 15%. 

On Wednesday, Sallee said the Senate version of the bill passed overnight might actually “reward” states with high error rates, like New Mexico, by giving them until 2029 to fix their error rates before imposing the increased cost-share. 

“The language is not entirely clear exactly how this is going to work, who’s going to be really in or out,” he said. “But at the very least it looks like that’s an example of where you’re going to hear a lot of people saying there’s going to be big cuts for food security in New Mexico. And it’s like, let’s take a deep breath and figure out when exactly that’s going to occur, and then give you time as policy makers, to figure out how you’re going to deal with that.”

Source NM is a nonprofit newsroom and a part of States Newsroom, the nation’s largest state-focused nonprofit news organization.

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