KY Policy Blog

What Trump Budget Proposal Would Mean for Kentucky

By Ashley Spalding
May 23, 2017

President Trump’s full budget proposal released today includes harsh, devastating cuts to critical poverty-reducing programs that provide health, nutrition and financial assistance to many Kentuckians. The budget also includes drastic cuts to federal grants to states that improve our economy and quality of life and provide needed assistance to Kentucky’s most vulnerable. The rural areas of our state, which continue to experience the greatest economic challenges, would be hit particularly hard.

Mandatory Federal Programs

President Trump’s budget proposal includes harmful cuts to so-called mandatory programs (meaning spending is determined by how many people are eligible) that provide important assistance to low-income Kentuckians. The largest of these programs are Medicaid and the Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps, both of which are cut dramatically in the proposal.

Medicaid & CHIP

There are 1.4 million Kentuckians covered by Medicaid, 472,800 of them through the Medicaid expansion, which would effectively end if the American Health Care Act (AHCA) that recently passed the House becomes law. Many who receive Medicaid in Kentucky are children, elderly and/or live in rural parts of the state, according to a Center on Budget and Policy Priorities (CBPP) analysis of 2015 American Community Survey (ACS) data:

  • 37 percent of Kentucky Medicaid recipients are under the age of 18.
  • 10 percent are age 65 and older.
  • 51 percent live in rural counties.

Medicaid funding would be cut an astonishing 47 percent by 2027 once the proposed Trump budget cuts of $610 billion are added to the massive Medicaid cuts in the AHCA. These extreme cuts would severely squeeze our state budget and force lawmakers to radically reduce enrollment, scale back benefits and reduce already inadequate provider payments. These Medicaid cuts add to the extent the program would no longer be fully-responsive to recessions and to health problem outbreaks like Kentucky’s drug crisis.

The proposal also includes a $5.8 billion cut to the Children’s Health Insurance Program (CHIP), which supplements Medicaid to provide health insurance for additional low-income children. In Kentucky there are 567,772 children enrolled in either Medicaid or CHIP, or 38 percent of Kentucky’s kids.

SNAP food assistance

SNAP helps low-income Kentuckians meet basic nutritional needs by providing assistance in the amount of approximately $1.36 per person per meal. The Trump budget proposal cuts SNAP food assistance by 29 percent, in large part by proposing to shift 25 percent of the cost of the program to states by 2023. However, Kentucky could not afford to make such a match for the program, which would have cost an estimated $245 million in 2016. By ending the structure of the program so it is no longer fully-funded by the federal government, the program wouldn’t be able to adequately respond to economic downturns.

Here are the Kentuckians who now participate in SNAP and therefore could be harmed by the deep proposed cuts to the program, according to CBPP:

  • 651,889 Kentuckians (308,453 households) were receiving SNAP in February 2017.
  • 41 percent were under the age of 18.
  • 25 percent were elderly or disabled.
  • 52 percent of Kentuckians receiving SNAP lived in a rural county.

Other Safety Net Programs

SSI & SSDI

Supplemental Security Income (SSI) provides income support for individuals who are disabled or elderly and have little income and few assets. As of December 2016, there were 180,613 Kentuckians receiving Supplemental Security Income (SSI) benefits. Of those, 58 percent are women and 61 percent live in rural areas.

Social Security also provides crucial disability insurance for people who have worked most of their lives but have had their careers cut short by severe medical impairments. As of December 2016, 203,471 Kentucky workers received Social Security Disability Insurance (SSDI) benefits.

Between these two programs the administration proposes a $72 billion cut.

EITC & ACTC

In 2015, 397,439 tax filers in Kentucky received $968 million worth of tax credits through the Earned Income Tax Credit (EITC) program, an average of more than $2,436 per filer. There were also 279,860 Kentuckians who received an Additional Child Tax Credit (ACTC) with an average value of $1,311 in the 2014 tax year. Around 40 percent of ACTC tax filers were single moms. Both of these tax credits help low-income Kentucky families get by while moving up the job opportunity ladder. But the budget proposes to cut $40.4 billion from these credits.

TANF

As of January, there are 18,300 Kentucky families receiving cash assistance through the Temporary Assistance for Needy Families (TANF). This number includes 32,124 children and 7,778 adults earning an average monthly benefit of $101.33 per person. TANF does several things to help families make ends meet. The majority of it goes to basic cash assistance (55 percent), and some goes to support work activities (13 percent) and child care assistance (18 percent). But the program is already stretched so thin that only 19 of every 100 families living in poverty receive any kind of cash assistance. The budget proposes a total cut of $21.7 billion over ten years to the program.

Housing Programs

In Kentucky, 153,584 people (76,039 households) receive assistance through Housing and Urban Development (HUD) rental assistance programs including public housing, Section 8 Housing Choice Vouchers, Section 8 Project-Based Rental Assistance, and Supportive Housing for the Elderly and People with Disabilities. The budget proposal includes deep cuts in rental assistance, which would further shrink the supply of affordable housing in our state and increasing homelessness. Overall, the cuts are 15 percent ($7.4 billion) below what policymakers recently approved for 2017. In Kentucky this means 3,619 fewer housing vouchers and $26.5 million cut from public housing. The Community Development Block Grant and HOME programs, which give flexible aid to poor rural and urban communities, would be cut by $39 million and $13 million in Kentucky, respectively.

Non-Defense Discretionary Grants

Federal Non-Defense Discretionary (NDD) programs improve Kentucky’s economy and quality of life in multiple ways— including by funding improvements in education, help for kids and families, healthier and safer communities, workforce and economic development and cultural enrichment opportunities. Kentucky currently receives approximately $2 billion a year in NDD funding.

The budget proposal includes almost all of the same severe cuts to NDD programs that were in the earlier “skinny budget” — a total of $54 billion below the already-austere sequestration level for 2018 and by $1.6 trillion over the next decade These cuts include critical federal investments in Kentucky’s coal communities.

The cuts in President Trump’s full budget proposal would harm the well-being of large numbers of low-income Kentuckians, particularly in the areas of our state experiencing the greatest economic challenges, while paving the way for extremely large tax cuts for the nation’s wealthiest. These cuts would hit our state especially hard given the relatively large share of funding our state receives from federal sources and the context of both federal and state budget cuts in recent years.

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