The federal tax and budget megabill shifts some of the financial responsibility of health care and food assistance to states and creates new administrative costs for agencies. This cost-shift will have serious consequences for state budgets. Aidan Davis and Wesley Tharpe of the Institute on Taxation and Economic Policy, writing in Governing, explain ways states can prepare: 

(S)tates can enact revenue-raising measures to help balance out what we recently saw unfold federally. They can lean into policies like millionaires taxes and clamping down on corporate tax avoidance. They can also consider more cutting-edge policies that tax income from wealth or target big polluters to combat climate change. Bold revenue-raising measures are essential both to fill new funding gaps emerging from the new federal law and better support long-needed state investments like child care and education.

States can also reverse prior tax cuts that sap much-needed revenue: 

More than half the states are bleeding revenue due to income tax reductions they themselves approved before the federal cuts were passed. Ongoing phased-in tax cuts should be paused, and states should roll back some of the deep cuts they already made, as Hawaii is considering. These rollbacks have precedent — most notably in Kansas, where a bipartisan group of lawmakers overturned the disastrous Brownback “tax experiment” of the mid-2010s, which hammered schools, health programs and other vital services.

Workforce Child Care Tax Credit

A new tax credit passed during the 2025 Louisiana legislative session will reward companies that invest in child care for their workers. The Shreveport Times explains how the Workforce Child Care Tax Credit will help put children on the path to a brighter future, while allowing parents to stay in the workforce: 

“We want businesses around the state to be aware that we are now doubling the value of the tax credit to companies that help provide quality child care for their employees,” said Adam Knapp, CEO of Leaders for a Better Louisiana, which supported passage of the legislation. … “Parents cannot work without access to quality child care,” [CEO of the Louisiana Policy Institute for Children Dr. Libbie] Sonnier said. “This law provides critical support to working parents and incentivizes employers to invest in child care solutions.”

Here’s how the new credit will work:

The program is capped at $1 million statewide in its first year and may grow to a maximum of $5 million in future years based on demand. Because of the cap, credits will be awarded on a first-come, first-served basis. … he law doubles the maximum allowable expenses businesses can claim for the construction, renovation and operation of child care facilities from $50,000 to $100,000 per year. It also increases the cap on payments businesses can make to child care providers on behalf of employees from $5,000 to $10,000 per child annually.

ACA enrollment drops in Mississippi

The number of Mississippians with Affordable Care Act health insurance coverage has decreased by more than 23,000 people so far this year. The decline comes as enhanced federal subsidies, which kept health insurance affordable for people who buy coverage through the federal Marketplace, expired at the end of 2025. Gwen Dilworth of Mississippi Today reports: 

Because Mississippi has opted not to expand Medicaid coverage, more low-income people depend on the Marketplace for health coverage, said Khaylah Scott, program manager for the Mississippi Health Advocacy Program. “For a lot of Mississippians, this is their only option,” she said. The drop in plan selections in Mississippi is twice as high as the country as a whole.

Louisiana, which expanded Medicaid in 2016, saw a 3% increase in ACA marketplace coverage compared to the same time last year. 

Politicizing hunger

Nearly 1 in 7 U.S. households had difficulty obtaining enough food to eat in 2024, according to a recent report from the U.S. Department of Agriculture. The data is part of the USDA’s annual survey that helps state and local policymakers determine funding amounts and effectiveness of anti-hunger programs. But the Trump administration is nixing the survey as federal policies that exacerbate hunger take effect. Peyton McConnell and Luis Nunez of the Center on Budget and Policy Priorities explain: 

This action is part of a larger pattern that will reduce the availability and quality of data. Without the data on food insecurity, it will be difficult to measure the harm inflicted by the Administration’s willful withholding of funds which delayed SNAP benefits in November 2025, and the largest-ever cuts to food assistance enacted in July 2025’s megabill as the cost of food continues to rise. Congress should act to require USDA to continue to collect and report on food insecurity data annually.

Number of the Day

59% – Share of U.S. consumer spending by the top 20% of earners. America’s economy is characterized by wealthier households doing better financially than their lower-and middle-class counterparts. (Source: Axios)