State Legislatures Brace for More Belt-Tightening in 2026 Sessions

While revisions in key allocations, such as Medicaid/Medicare, will dent coffers, most ‘rainy day’ funds are flush and most annual spending plans already lean.

A sign in support of Medicaid rests in a walking device during a sit-in protest against a Republican budget plan on the House steps of the U.S. Capitol in Washington on April 27, 2025. Bryan Dozier/Middle East Images/AFP via Getty Images

State legislatures next year will need to adjust annual spending plans to accommodate revisions in key allocations outlined in the recently adopted fiscal year 2026 (FY26) federal budget.

HR 1, the One Big Beautiful Bill Act, the FY26 budget signed into law by President Donald Trump on July 4, makes wholesale changes to tax codes and a range of other state-administered programs, most notably Medicare/Medicaid and SNAP.