Sour taste as Massachusetts politicians unpeel “big, beautiful bill”

By Chris Lisinski, Colin A. Young

The top Republican in the Massachusetts House is still parsing the so-called “big, beautiful bill” that became law Friday to figure out where he lands.

House Minority Leader Brad Jones is nearly certain of one thing, though: he and his colleagues will find their own work altered as a result of what President Donald Trump signed into law.

“This [law] is, what, nearly 1,000 pages, touches on hundreds of different aspects of tax and public policy and spending policy?” Jones said in an interview Monday. “I would find it nearly impossible to think that the Legislature wouldn’t have something to do to bring us in sync, or to address something funding-wise that we view as a priority that’s now not going to be covered by the federal government.”

Top lawmakers, including Democrats who wield supermajority margins in both chambers, had their hands full over a long holiday weekend beginning to unpack one of the most significant new federal laws in decades, a package with major impacts for MassHealth, food aid, clean energy and more.

Rep. John Lawn, the point person for the House on most health care matters, said Monday he expects the new law to be “devastating” for Massachusetts — and he “do[es] not see any silver lining in these cuts.”

Hundreds of thousands of people who lose MassHealth coverage will still need care, Lawn said. He expects they will still show up in emergency rooms and “go into the free care pool,” further straining community hospitals and safety-net providers who are already struggling financially.

“The cuts will really ripple across our entire health care system,” he said.

His counterpart on the Health Care Financing Committee, Sen. Cindy Friedman, agreed.

“It’s not hyperbole to say that this bill is far from beautiful, and in fact is terrible for our economy, for our working-class residents, and for government operations of Massachusetts,” Friedman said in a statement.

Both Lawn and Friedman signaled they will have their hands full developing and navigating a legislative response — Friedman said “it will take an immense, collaborative effort to even begin to mitigate the negative impact this bill will have on just physical health here in Massachusetts” — to the Medicaid cuts.

However, Lawn said the timeline is not clear, especially because lawmakers are still trying to get a better grasp of the full scope of impacts.

“We’ve already been having discussions, but until we knew actually what the cuts would be, how we go from there will remain to be seen,” he said. “As you know, we’ve got a hospital system and health care system that’s very fragile going into this, and these cuts will really have effects downstream on our workforce, especially in our rural areas.”

The nonpartisan Congressional Budget Office has not yet released updated projections on how the final law could affect Medicaid enrollment by state. Nonprofit health policy organization KFF previously estimated the House version of the bill could cause 165,000 to 275,000 Bay Staters to lose coverage by 2034.

Food Security and Assistance

Tens of thousands of Bay Staters are also at risk of losing access to food aid.

The Massachusetts Law Reform Institute estimated that about 175,000 Bay Staters could lose some or all of their Supplemental Nutrition Assistance Program (SNAP) benefits under the law, which according to anti-hunger group Project Bread tightens work requirements, eliminates SNAP eligibility for immigrants with legal status, and shifts a significant portion of program costs to state governments.

For about half a century, food stamp benefits have been completely funded by the federal government, while Washington and states split administrative costs evenly, according to Leran Minc, Project Bread’s director of public policy.

The new law will require states to pick up 75% of administrative costs and, depending on a state’s “error rate” in paying out aid, 5% to 15% of benefit costs. Minc said those two changes could together add roughly $450 million per year to the amount Massachusetts must pay per year to maintain SNAP.

“We’re very much concerned about what are we not going to be able to do, or what are we going to scale back on because we’re covering that amount,” Minc said.

“If the state ultimately decides that they can’t fund that, it’s a bit of an open question of what the federal government would do,” he added. “What’s expected is that cost-sharing, cost-shift would slide proportionally, so if the state was only able to cover half of their obligation, the federal government would likely only cover half of their obligation. That becomes a very big cut to the program, so then there have to be decisions made of, ‘How do we scale back eligibility and benefit levels?'”

Cost-sharing changes will not take effect immediately — especially if Massachusetts winds up triggering a carveout delaying implementation in states with the highest payment error rates — so there will be some time for lawmakers and Healey to craft a response plan.

Minc said Beacon Hill could also invest more to lower its payment error rate, which might lower the share of benefits that state government needs to cover.

“It would be really hard to walk away from that 85% and still find a way to help people meet their basic needs, so I believe once we think about all those different facts, as much as it’s a bitter pill to swallow, I feel fairly hopeful it is a pill they will swallow,” he said of the cost to cover benefits.

House and Senate Democrats in recent years have deployed state dollars to plug gaps opened up by changes to federal programs or to continue offering services once funded by the federal government, like free school meals and so-called C3 grants to early education providers.

While legislative leaders have not made any pledges yet, they’re already facing calls from advocacy groups to once again function as a financial cavalry.

“If we do not mitigate this federal damage in the Commonwealth, hundreds of thousands of Massachusetts residents will go hungry, get sicker, grow poorer, and struggle unnecessarily – and our local communities and economies will suffer the consequences,” said Georgia Katsoulomitis, executive director of the Massachusetts Law Reform Institute.

Sen. Jo Comerford, a regular advocate for enhanced food security funding through SNAP and other programs, said Monday that the “big brutal betrayal bill” represents “cuts to lifeline programs” for people across Massachusetts. She said cuts to food aid programs are particularly surprising in light of increases in food insecurity nationally.

“They’re cutting at a time when folks are struggling more,” she said.

Comerford stressed that it will take time for the impacts of the new federal law to trickle through state agencies and for issues to reveal themselves. As vice chair of the Senate Committee on Steering, Policy and Scheduling, the Northampton Democrat is involved in the Senate’s “Response 2025” effort to address changes out of Washington. She said she believes state government is “bracing for real hardships here.” 

She said she has focused on protecting Bay Staters from federal cuts and has not identified a positive from the new federal law.

“We’re all preparing for how Massachusetts responds to what happens out of Congress and we’re doing it in, I think, responsible ways as we understand that it’s going to be a range of cuts, from health care to food security to other critical programs for constituents,” she said, pointing to an $800 million cushion lawmakers built into the new state budget and the governor’s further budget cutting. “I hope that for the people I work for there isn’t pronounced or prolonged hardship. That’s what I hope will be the case. I fear that people will experience some — they certainly are experiencing anxiety right now, that’s without question. I hope we’re able to work together as the House and Senate and the administration to do the best we can in these really, really difficult circumstances for the people we serve.”

The “Largest Tax Cut in History”

The White House promoted the bill the president signed on July 4 as a “once-in-a-generation piece of legislation that makes good on his campaign promises and puts America First.” The administration said the new law features the “largest tax cut in history for middle- and working-class Americans,” a permanent increase in the Child Tax Credit for more than 40 million families, a $12.5 billion outlay to modernize air traffic control across America, federal spending cuts that total $1.5 trillion, funding for a “Golden Dome” missile defense system, and more.

“President Trump’s One Big, Beautiful Bill delivers on the commonsense agenda that nearly 80 million Americans voted for – the largest middle-class tax cut in history, permanent border security, massive military funding, and restoring fiscal sanity,” White House Press Secretary Karoline Leavitt said in a statement. “The pro-growth policies within this historic legislation are going to fuel an economic boom like we’ve never seen before.”

The bill includes a handful of policy ideas that Trump made popular last year on the campaign trail. For example, most workers will be able to deduct the first $25,000 they earn in tips annually from their taxable income through 2028. Similarly, the first $12,500 that an individual earns in overtime pay will be eligible for a deduction through the 2028 tax year.

The Joint Committee on Taxation last week estimated that, for calendar year 2027, the largest tax cut by percentage will benefit people who earn between $15,000 and $30,000, a projected 27.1% tax cut that translates into about $3 billion saved. By dollar amount, people who make $200,000 to $500,000 stand to benefit the most, to the tune of $51.2 billion in total tax savings (which represents a 3.5% cut). 

From less than $15,000 to more than $1 million, every income bracket is expected to see a tax cut under the new law, the committee said. Across the board, taxpayers can expect to save a cumulative $179.8 billion (3.8%) in 2027.

Bay State Republicans have been far slower than their national counterparts to embrace the new law. Senate Minority Leader Bruce Tarr of Gloucester was not able to provide a comment on the bill Thursday when the U.S. House sent it to Trump and told the News Service on Monday that he was still analyzing the legislation.

“There’s not a lot to say right now,” Tarr said. When asked if he expects the federal law to be a net positive to Massachusetts, he said, “Don’t know. Not sure. That’s why it doesn’t make sense to talk right now. When we know, we’ll be happy to talk.”

Jones gave the new law a mixed review. He said some of the tax code changes, like allowing tax deductions on tips in overtime pay, could be great for some Bay Staters, but voiced concerns about cuts to Medicaid and food aid.

“I put myself in the category of TBD,” Jones told the News Service. “Depending where you are situated, tax-wise, you know, maybe it’s a big upside, at least initially. But from what I read, most of the beneficial tax things — overtime and tips — are sunsetted, so you may get a false sense of, ‘Oh, wow. This is wonderful.’ Whereas some of the things that you think have more downside are maybe more permanent.”

“If you read a lot of reports, the gap between the bookends of worst-case [and] best-case can be pretty broad,” he added.

Others, including a cadre of GOP representatives who withheld their support for the bill until the final vote, have raised concerns about what the new law will mean for federal debt. The Congressional Budget Office said last week that its estimate is that the new law will increase federal deficits by $3.4 trillion between now and 2034. 

S&P Global Ratings said states and nonprofit health care providers “are affected by new Medicaid stipulations that standardize work requirements for recipients, reduce the provider tax, and introduce other programmatic changes that could financially pressure issuers in the longer term.” 

“On the positive side, modifications to some federal income tax provisions could benefit individuals in states with high tax burdens and potentially support employees in some industries,” S&P Global Ratings Chief Analytical Officer Nora Wittstruck said.

One of the more closely-watched policy sections of the federal legislation here was a proposed 10-year ban on state-level regulation of artificial intelligence, which was removed by the U.S. Senate before the bill went to Trump. During an appearance on WCVB’s “On The Record” Sunday, Sen. Barry Finegold talked about the need for state and federal guardrails on the technology.

“I think people really don’t understand what regulating AI means. We want artificial intelligence to grow. It is an incredible technology and it’s going to do wonderful things. But just like social media early on, we didn’t really truly understand what this thing would become,” he said, agreeing with a host that state lawmakers “missed the boat” when social media first took off. “And I think to have proper guardrails around artificial intelligence is a good thing.”

The Andover Democrat said he’s been working with state senators from New York and California on AI issues but said the country “absolutely” needs comprehensive federal regulation of AI as well.

“We don’t want to have, you know, 50 different versions of an AI bill and 50 different regulations for each state. So should this happen on the federal level? It should. Is it happening? No. The same reason why we still don’t have a federal privacy bill,” Finegold said. “So that’s why states like ours, I believe, need to step up — not to fully regulate it, but to have proper guardrails so people don’t get hurt.”

Big Weekend For Budget Action

Gov. Maura Healey signed a $60.9 billion state budget on the same day Trump signed the federal megapackage into law.

The fiscal 2026 spending plan Healey approved has a few measures built into it to absorb some federal funding changes. She vetoed $130 million, lawmakers left a roughly $800 million cushion of projected but unappropriated revenues, and the budget also deploys a larger bucket of income surtax revenues.

Healey’s team will also wait to pay roughly $125 million in earmarks until at least the fall, at which point officials hope they will have a better sense of whether that spending is feasible.

Administration and Finance Secretary Matthew Gorzkowicz said last week that his team has been examining the megabill’s impacts on Medicaid, the Massachusetts Health Connector, food aid, higher education and taxes.

Gorzkowicz said he expects to have a solid grasp on how those issue areas will affect state government and the state budget within about a month. The full impact of other provisions outside that shortlist might take longer to parse, he added.

The Massachusetts Taxpayers Foundation said in a report published Monday that Medicaid impacts to the state budget “could be close to $100 million” in fiscal 2026, which started July 1.

Still, the cavalcade of federal changes will not hit all at once, and the bigger impacts on the state budget might be more concentrated in subsequent fiscal years. 

Extension of many tax cuts will start this year and appear when Bay Staters file tax returns next year. Some clean energy tax credits will also end in the coming months. Reforms and restrictions on health insurance could start next year, Medicaid work requirements will not begin in most states until the end of 2026, and a major shift in federal funding toward Medicaid and food aid will not start until 2028, according to The New York Times. 

As the Times noted, the combined effect means many of the law’s tax benefits will arrive soon, while cuts will be delayed largely until after next year’s midterm elections.