At a glance:
- Congress and President Trump are considering cutting federal funds to states, primarily to finance tax cuts for the wealthy, with Maine facing a potential $649 million budget shortfall affecting health care, food assistance, and education
- The funding cuts could lead to a loss of $861 million in economic output, 4,900 jobs, and $46.7 million in state tax revenue, with federal funding for Medicaid ($345 million), SNAP ($86 million), and education ($218 million) being the most affected
- MaineCare (Medicaid) faces a $345 million cut, leading to a $749 million drop in economic activity and 4,300 lost jobs. SNAP cuts of $86 million would cost 600 jobs and reduce economic output by $112 million.
- Federal threats to school funding, including special education, grants for students with low income, and school lunches could impact 8% of Maine’s public K-12 budget, potentially leading to property tax hikes
- Maine legislators can oppose the cuts at the federal level, use state reserves, and explore tax options to replace lost revenue, ensuring minimal harm to Mainers amid federal budget uncertainty
Congress and President Trump are currently considering drastically cutting funding to states, primarily to pay for the renewal and expansion of Trump’s tax cuts that largely benefitted the wealthiest Americans. While there are a slew of different forms these funding cuts could take, the most prominent would be cuts to health care, food assistance, and school funding, which together could blow a $649 million hole in Maine’s state budget.
A funding gap of that size would not only put other state programs at risk as lawmakers scramble to balance the budget but would have ripple effects if the state fails to fill the hole left by federal funding. Beyond the direct human impact of cuts to health care, food assistance, and school funding that would leave Mainers sicker, hungrier, and struggling in school, withdrawing that money from the state economy would lead to loss of economic activity, tax revenue, and state jobs.
MaineCare ($345 million)
Congress is considering a budget resolution to extend and expand the Trump tax cuts which includes a cut of $880 billion over the next decade to help cover the cost. This is an almost 12% cut to Medicaid funding, which translates to a loss of $345 million in funding in Maine for the state’s Medicaid program, known as MaineCare, in 2026. According to estimates from the Commonwealth Fund, this would result in a decline in state economic output of $749 million a year, a loss of 4,300 jobs, and a decline in state and local tax revenue of $39 million.
Food assistance ($86 million)
Similarly, the budget plan calls for a $230 billion reduction in federal spending on the Supplemental Nutrition Assistance Program (SNAP) over the decade, which represents a 21% cut to spending for program almost entirely funded by the federal government. That would translate to an additional cost of $86 million a year for the state to continue food assistance to 170,000 Mainers. The Commonwealth Institute estimates this will result in a decline in economic output of $112 million a year, a loss of 600 jobs, and $8 million less in state and local tax revenues.
Education ($218 million)
Federal funding for Maine’s education system is threatened by proclamations by President Trump which, while potentially illegal, could nonetheless result in funding delays or outright cancellation. President Trump has threatened school funding nationwide by attempting to eliminate the US Department of Education and has also singled out Maine schools for their adherence for state laws that allows transgender athletes to compete in school sports with the gender they identify with, and which promote cultural understanding in social studies classes.
The three largest streams of federal funding to Maine schools are:
- “IDEA” grants, which support special education, totaling just under $66 million in 2024
- “Title I” grants, which support schools with a high percentage of low-income children, totaling just over $61 million
- The national school lunch program, which provides $65 million a year and helps support free school lunches for all Maine K-12 students
- A number of smaller grants provided a total of $26 million of support in 2019
Whether or not President Trump has the unilateral authority to hold up or outright cancel these funds is questionable. The president’s interpretation of federal law on transgender athletes is novel and untested. And funding programs within the Department of Education are authorized by Congress and cannot be cancelled by executive order. Nonetheless, executive branch actions could at the very least result in delays to these funds which comprise approximately 8 percent of public K-12 school budgets in Maine. These cuts would not only complicate state budget-making, but also threaten property tax increases at the local level, if communities find themselves picking up more of the cost of local education.
The scale of federal cuts approaches that of other core programs
To put the proposed federal cuts in perspective, here’s how they stack up against other key state spending items:
- $345 million (the size of the proposed MaineCare cuts) is equivalent to the amount Maine spends on bridge construction and engineering each year ($341 million in 2025)
- $218 million (the amount of education funding at risk) is equivalent to the amount the state sends to towns through municipal revenue sharing ($216 million in 2026)
- $86 million (the size of the proposed SNAP cuts) is close to the State Police budget ($98 million in 2026)
What state lawmakers can do
The first priority for state lawmakers concerned about the impacts of these cuts must be to advocate with their federal colleagues not to make the cuts in the first place, and challenge the President’s attempts to illegally withhold funds.
If all these funding cuts do go ahead, they would create a sizable hole in the state budget. $649 million represents just under 12% of the state’s projected general fund revenue in 2026.
Lawmakers do have options to replace lost revenue. MECEP has compiled a series of tax options that lawmakers can use to collect hundreds of millions of dollars in revenue if necessary. Maine also has healthy reserves that could be used to shore up programs that will be vitally important to families facing economic uncertainty. Using the state’s Budget Stabilization Fund would be especially appropriate to cover a temporary freeze of funding that is subject to a court review.
While actions by Congress and the President represent a real threat to the state budget, lawmakers must remember their own agency to fight these cuts and to find new sources of revenue if necessary to hold Mainers harmless from the chaos in Washington.
