We Know, it’s Not Good and it Requires Immediate and Bold Action
Rarely does a day go by without a news story detailing another way in which the Trump- Republican mega bill will harm Minnesotans.
Nearly 140,000 residents are likely to lose health coverage, says one article. Another cites estimates that changes in the key federal nutrition program will add more than $120 million to the state’s bill for benefits and administrative costs. A third news story focuses on the cuts to renewable energy programs, claiming Minnesotans will “pay way more on their monthly electric bills, to say nothing of the existential threat of climate change.”
And so it goes. Meanwhile, many Minnesota Republicans are responding with only tepid endorsements. Minnesota House Speaker Lisa Demuth and floor leader Rep. Harry Niska, issued a a joint statement: “On balance, this bill appears to benefit Minnesotans.” Of course, appearances can be deceiving.
The One Big Beautiful Bill’s childish name is well suited to its profound lack of policy sophistication. It does little in the way of reforming federal programs in meaningful and long-lasting ways. Instead, it makes ill-advised spending cuts that ignore evidence, both scientific and economic.
Consider the new eligibility requirements for Medicaid. Arkansas was the first in the nation to try an approach with similar restrictions, imposing work requirements for 30-to-49 year olds with incomes below the federal poverty level. The initiative quickly led to 18,000 adults disenrolling from Medicaid with no increase in employment, according to data gathered by Harvard and published in the journal Health Services Research.
Well, say Republicans, if people don’t want to work, that’s up to them. At least they are off the public dole. Except that’s not the case. Those denied Medicaid often forego care until conditions bring them to hospital emergency rooms. What often could be treated in a doctor’s office now requires attention in the most expensive setting in the health system. There, federal law requires that all residents be treated regardless of their legal status or ability to pay. It’s why so many health economists are warning that in spite of limited hospital funding included in the bill, small hospitals, especially in rural communities, will be forced by OBBB to close their doors.
Where is the win? The growth of Medicaid might be slowed, but overall health costs aren’t changed. More people end up sicker and still unemployed. The viability of hospitals and other health facilities is threatened. And, $3 trillion to $5 trillion is added to the federal debt.
Minnesota is especially vulnerable to the worst effects of the federal legislation. Minnesota is one of fewer than a dozen states to administer programs like Medicaid and food assistance through counties. That puts the 87 counties on the hook for creating, managing and financing expensive new systems to impose and oversee complicated eligibility rules.
Higher costs for counties mean higher property taxes coming on top of assessments already soaring as other local costs have risen. Between 2019 and 2024, property taxes statewide increased by more than 33%, a year-over-year average of 6.6%, according to data from CoreLogic. While home prices went up 37% during the same period, the increased value is realized only when the home is sold. Property taxes are due rain or shine, good years and bad.
When given the opportunity, property owners increasingly are saying no to higher taxes on their homes, even for investments they long have supported. For example, Minnesota voters last year rejected 35 out of 64 school referenda to raise property taxes. A survey of 47 school districts in Minnesota’s largest communities found they were facing a cumulative shortfall of $280 million this spring as they prepared budgets for the 2025-26 academic year. While the state has increased the funding formula and added an inflation adjustment to the per-pupil aid, it’s not enough to patch a broken system. And property owners increasingly are reluctant and unable to fill the gap.
That’s the problem facing Minnesota. So many of the state’s most important systems – education, health care, taxation and others – are outdated. They cost too much and deliver too little. The OBBB exacerbates the challenges by transferring significant costs from Washington to state and local governments while adding new administrative expenses.
Unfortunately, both Republicans and Democrats have their partisan reasons for taking a wait-and-see approach. The GOP isn’t eager to ring alarm bells about the likely impact of the federal legislation on local property taxes. Most Republicans are well aware of the probable outcomes. It’s why the congressional majority postponed implementation of some of the most onerous provisions until after the 2026 and 2028 elections. Good politics; bad policy.
Democrats, for their part, want to sell the myth that their management of the state budget when they controlled government during the 2023-24 session of the legislature prepares Minnesota for whatever comes. As Gov. Tim Walz told MinnPost, “We have the highest rainy day funds we’ve ever had. We have surpluses for the next two bienniums. And because of the work of the Legislature and because of our year-end revenue numbers, our structural imbalance out into 2028 and 2029 is virtually eliminated.”
Maybe. But what happens if the economy slows, as many economists are predicting? What is the plan to keep rural health care facilities open and serving increasingly older populations? Academic outcomes already are dismal; what is the impact of deep cuts to teaching staffs and support services as school districts scramble to fill ever-growing budget holes?
There are few ripple effects to the Trump bill, mostly big waves. Even though Minnesota has fewer enrollees in the federal Supplemental Nutrition Assistance Program (food stamps) and a lower error rate than most states, changes from the Trump law will shift $86 million in annual benefit costs to the state and add an estimated $40 million in administrative overhead, most of that borne by counties. And that’s just one of many new burdens the OBBB will impose.
Minnesota policymakers can hope Republicans are right and the bill is beautiful by reducing safety net enrollment while the tax cuts are a catalyst to an economic boom. Or, they can follow the DFL and hope that public backlash will force a reckoning at the midterm elections next year, giving Democrats the seats and leverage in Congress to repair the bill.
Good luck with either dream. Both approaches just whistle us past the graveyard of public systems that were designed for a different population and economy. Minnesota needs a major overhaul of public policy and public systems. And time is not on our side.
The OBBB is a terrible piece of legislation. Doing nothing to prepare for it only makes bad policy worse.
Sad to say, Tom Horner is right on all counts. Minnesota has always risen to the occasion when faced with failing systems (see the “Minnesota Miracle,” for example. Let’s hope that our leaders in the Legislature and Governor’s office are up to the current challenge. While it benefits me, personally, perhaps we should reconsider the state tax on Social Security income and some of the other recent tax and policy changes in order to pay for the services that Minnesotans want and deserve.