Congress’ intent to cut food assistance through the Supplemental Nutrition Assistance Program (SNAP) became clear months ago and was further solidified after both the House of Representatives and the Senate passed a budget resolution directing cuts from the committees with jurisdiction over the U.S. Department of Agriculture. Now, as both chambers work to draft legislation that adheres to their budget targets, an idea continues to be floated: cut SNAP by making states cover a portion of the federal program’s food benefit costs.
Paying for even a small percentage of this assistance would be difficult for states under normal circumstances; the budgetary pressures of a recession would increase the weight of this burden substantially. New Center for American Progress analysis shows that state revenues were unable to keep up with rising SNAP costs during the prior three economic downturns and that a policy that shifts costs to states could cut food assistance for nearly 43 million Americans.
States cannot keep up with soaring SNAP costs resulting from higher demand during economic downturns
The federal government fully funds SNAP benefits and pays for about half of the state administrative costs. Requiring states to pay for a portion of SNAP benefits for the first time would force them to take on an expensive new line of spending. Details of the proposal remain unclear, but offloading 25 percent of benefits—which the Trump administration proposed in its fiscal year 2018 budget—would cost states anywhere from tens to hundreds of millions of dollars per year.
How could a SNAP state match work?
Switching SNAP from having benefits be federally funded to requiring state matching funds would exacerbate potential funding cuts, likely forcing states to reduce benefits, restrict eligibility, or both. For instance, implementing a 25 percent match for a state typically receiving $1 billion per year in SNAP benefits would require the state to pay $250 million and the federal government to pay $750 million. But if the state can only afford to pay $200 million, then that would be considered its 25 percent share—and the federal government’s share would drop to $600 million, for a total of $800 million, or a 20 percent cut from the original $1 billion. Similarly, if the state could instead only afford to pay $100 million, total benefits including federal payments would equal $400 million, a 60 percent cut. Although the policy could be structured differently, this is how state matches are often set up.
As Table 1 shows, a state match can be particularly dangerous during recessions, since this is when state revenues from personal and corporate income taxes as well as sales taxes often fall and are unable to keep up with the rising need for food assistance. In the immediate aftermath of the dot-com bubble, the Great Recession, and the COVID-19 recession, state revenues fell in real terms by a median of 5.1 percent, 7.3 percent, and 5 percent, respectively. Most states have balanced-budget requirements that prevent them from spending more than they collect in revenue, which makes paying for programs such as SNAP that act as “automatic stabilizers” even more difficult since such programs require increases in spending during recessions to help the influx of laid-off workers access basic needs.
Costs associated with SNAP soared in response to the past three recessions. SNAP participation typically rose by around 10 percent during fiscal years 2002 and 2020 and by more than 20 percent during fiscal 2009. Meanwhile, the amount being spent on benefits rises even more rapidly during economic downturns, with the median state receiving a 20 percent increase in SNAP assistance during the 2002 fiscal year, followed by increases of roughly 60 percent and 70 percent for fiscal years 2009 and 2020, respectively.
2001 recession
-5.1%
State general fund revenue
+20.1%
SNAP benefit costs
Great Recession
-7.3%
State general fund revenue
+59.5%
SNAP benefit costs
COVID-19 recession
-5%
State general fund revenue
Protecting and strengthening SNAP is vital for minimizing harm during recessions
SNAP is especially effective in combating recessions due to its structure. By guaranteeing that benefits will be available for all eligible applicants, the program is able to provide quick relief for families struggling to make ends meet, which also serves to circulate money throughout their communities since recipients are likely to spend this money quickly. Research suggests that each dollar invested in SNAP during a slowing economy provides a roughly $1.50 return in gross domestic product (GDP). This stimulus allows for faster recoveries by creating jobs and raising tax revenues, but forcing cuts to this assistance due to tight budgets would reduce its effectiveness and lengthen periods of hardship, particularly in rural areas.
It already typically takes multiple years for state revenues to rebound back to pre-recession levels. In fact, it took a decade for states to recover from the Great Recession. During these periods of fiscal stress, legislatures often enact cuts after passing a budget in order to balance their finances, as was the case for 41 states in FY 2009 and for 37 states in FY 2002. Additionally, states also must account for automatic increases in recession spending on Medicaid as more people lose access to health insurance through their employers. The added costs from elevated SNAP participation alongside higher benefit levels would further increase the likelihood that states fail to pay for their full share at some point during a multiyear recovery, resulting in cuts to essential supports that help the economy recover more quickly.
Read more
Conclusion
Congress cannot cut billions of dollars from SNAP without severely reducing benefits or limiting access to food assistance. Passing costs on to states would result in cuts and restrict the flexibility of the program to respond to changes in economic conditions, as states would struggle to consistently pay any required share due to strict balanced-budget requirements. States’ conflict between balancing a budget and meeting increased need for SNAP would be most acute during recessions when state revenues fall, likely demanding cuts at a time when more families need help paying for groceries. Amid the current climate of severe economic uncertainty, implementing a state match would immediately put more than 40 million Americans receiving food assistance at risk of going hungry.
The author would like to thank Kennedy Andara, Lily Roberts, Emily Gee, Bobby Kogan, Jerry Parshall, Madeline Shepherd, Colin Seeberger, Cindy Murphy-Tofig, Steve Bonitatibus, Bianca Serbin, Bill Rapp, and Sachin Shiva of the Center for American Progress for their valuable assistance and feedback. Additionally, the author would like to thank Katie Bergh of the Center on Budget and Policy Priorities for her valuable review.