Senate Republicans revive food stamp penalty in Trump's tax bill

WASHINGTON — Republicans' proposal to force states to take on billions of dollars in federal food benefit costs is back in the Senate's version of the massive tax package after revisions published Wednesday by the Senate Agriculture panel.

Senate Agriculture Chairman John Boozman, an Arkansas Republican, announced that the Senate parliamentarian had ruled the panel’s revised state cost-share section for the Supplemental Nutrition Assistance Program complies with the strict rules that govern the budget-reconciliation process after it was ruled out by the Senate parliamentarian late Friday.

Sara Lasure, a committee spokeswoman, later clarified that the parliamentarian hadn't yet ruled on the revised provision, but the panel had received "signals" that it would satisfy the guidelines.

The change would give states more time to adjust and prepare for the cost shift in the food stamp program for the poor.

“This paves the way for important reforms that improve efficiency and management of SNAP, while encouraging responsible use of taxpayer dollars," Boozman said, adding that over $10 billion was "misspent" when states administered the program in 2023.

"Our commonsense approach encourages states to adopt better practices, reduce error rates, be better stewards of taxpayer dollars, and prioritize the resources for those who truly need it."

Michigan officials have said they'll have to cut benefits for the state's nearly 1.5 million federal food aid participants because the state can't absorb the $900 million hit that the new cost-share would impose under the GOP bill that the U.S. House passed in late May.

The Senate GOP's version of the legislation softened the House's cost-share provision. The Senate proposal would, starting in 2028, require states to shoulder up to 15% of the SNAP program's benefit costs, while the House bill would shift up to 25% of the benefit costs onto states. Benefits have historically been 100% paid for by the federal government.

The level of cost-share owed by each state would depend in part on how efficiently they administer the program.

"What I'm very concerned about are the number of kids in Michigan that are going to lose access to food because of the way that they are defining error rate and, frankly, just the overall reduction to get to over $300 billion of cuts in SNAP," said U.S. Rep. Kristen McDonald Rivet, a Bay City Democrat who sits on the House Agriculture panel with oversight over SNAP.

"That means people are not going to eat. That is just a core fact," she told The Detroit News at the U.S. Capitol.

"This was moved at a rate without any consideration or any study of what it was going to actually do to the most vulnerable people in our communities, and it's still the wrong thing to do."

Republicans in Congress say they want to hold states accountable for billions of dollars spent annually on erroneous payments to participants.

Under both the Senate and House versions of the bill, the amount each state would have to contribute toward SNAP benefits is based on its payment error rate. States like Michigan, with high error rates (10.7% for 2023), would be responsible for more of the cost.

The maximum 15% state-match level included in the Senate bill would produce a budget gap estimated at $467 million in Michigan, where low-income households are on track to qualify for $3.1 billion in annual SNAP benefits in 2025.

If the 15% cost-share also extends to SNAP’s summer program for families with school-age children, the cost to the state could hit nearly $482 million, according to state data.

States that manage to bring their payment error rates below 6% would not be mandated to pay a share of SNAP costs, according to the Senate text.

The updated provision from Boozman's panel allows states to choose either their payment error rate for fiscal year 2025 or 2026 to calculate their state-match requirement that would kick in in 2028. Starting in 2029 and for following years, the state match would be calculated using the error rate from three fiscal years prior.

The U.S. Department of Agriculture says payment errors are usually unintentional mistakes by a state agency staffer or by the SNAP household.

Elizabeth Hertel, director of the Michigan Department of Health and Human Services, has complained about the proposal to index the cost-share to a state's error rate because states are punished in part for errors made by household members when filling out applications or other paperwork ― errors that MDHHS can't control.

"We've been working really hard to bring that down, and I think that we'll be successful in seeing a reduction in that," Hertel told The Detroit News earlier this month about the state's error rate.

State payment error rates are released each year at the end of June, and the 2024 rates are not yet available.

The Senate Agriculture bill would make roughly $41 billion in spending cuts as part of a larger tax and border bill that is the cornerstone of President Donald Trump's second-term agenda. The Republican president has dubbed the legislation "one big beautiful bill."

Democrats on the Senate Agriculture panel said Tuesday that the Congressional Budget Office had estimated that the committee's bill would end SNAP for 2.9 million Americans, including 1.1 million who live where jobs are "scarce."

McDonald Rivet said she did like that the Senate Agriculture panel's version of the bill adjusted the expansion of 20-hour-per-week SNAP work requirements for the first time to parents with children over the age of 10 instead of age 7, as was in the House proposal.

"I thought it was a step in the right direction," she said.

Medicaid provider tax concerns

House Speaker Mike Johnson, R-Louisiana, said Tuesday that he expects the Senate to pass the One Big Beautiful Bill Act by Friday or Saturday. He has advised House lawmakers to keep their schedules flexible so that they can take up the legislation after that and send it to Trump by the Fourth of July.

"I remain very optimistic that there is not going to be a big chasm between the two products, what the Senate produces and what we produce. We all know what the touch points are and the areas of the greatest concern," Johnson told reporters Tuesday.

"We want to make sure that we hold by our commitment that we are not cutting Medicaid," he added.

Rep. Lisa McClain of Bruce Township, who is chairwoman of the House GOP Conference, echoed Johnson's concerns about some of the Senate's changes.

"The Senate has to touch this bill very, very lightly. We put the best product on the floor. We had worked on this for nine months. If they change it dramatically, it's going to be a really tough sell for us in the House," she said.

The Senate's capping Medicaid provider taxes at 3.5% are especially concerning to some House Republicans, including McClain, who emphasized the risk they pose to undermining financing for rural hospitals that have higher portions of patients on Medicaid.

"I'm worried about that, too. I have a lot of rural hospitals in my area that I need to advocate for that I can't have shut down," McClain said.

"We threaded that needle very, very carefully, and I was in constant communication with these guys. They can't change that dramatically. It's just gonna be too hard."

The Michigan Department of Health and Human Services said Wednesday that the changes proposed in the Senate bill to Medicaid provider taxes and state-directed payments would cut more than $2.5 billion from Michigan hospitals and physicians.

The agency predicted the change would hurt rural areas of the state the hardest, as many rural counties in Michigan have 40% or more of their population on Medicaid.

"That means that not only would people in those areas lose access to health care, but health care providers in those areas who count on Medicaid to pay the bills may be forced to close," MDHHS spokeswoman Lynn Sutfin said by email.

"In many of our rural areas the local hospital is the largest employer. When providers close their doors, they do not just stop seeing Medicaid beneficiaries, they close for everyone in the community."

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