Politico: Trump's Megabill is Creating a Budget Nightmare for States
July 14, 2025
The fiscal pain comes as up to 20 governors face reelection in 2026.
New reporting from Politico analyzes the impact of Donald Trump’s “Big Beautiful Bill” on the reelections of incumbent governors, including Joe Lombardo, as the bill stands to decimate state budgets and force either tax hikes or even deeper cuts to critical services like education, public safety and disaster relief.
The article highlights how the “widely unpopular” spending bill signed by Trump “could pose problems for Lombardo”, who has praised the bill, as it poses a “serious financial problem” and will force governors “to decide between politically unpopular tax hikes or further changes to Medicaid that could kick more people off the program.” Notably, governors are being forced to weigh tax hikes or cuts to services as the GOP bill makes tax cuts for billionaires permanent.
State Senator Fabian Doñate, Chair of the Senate Health and Human Services committee, was quoted about the bill in the piece, saying “It’s just too early to tell how bad it is, but from what we know so far, it is going to be a life and death situation for many folks.” Doñate and others made the point that, “when people start to lose their health insurance they will blame Lombardo for not speaking out more against the law.”
Read more below:
Politico: Trump’s megabill is creating a budget nightmare for states
July 14, 2025
Key points:
- President Donald Trump’s landmark legislation is driving a giant hole in governors’ budgets in a midterm year.
- By slashing health care and food assistance for low-income Americans, Republicans in Washington are passing tremendous costs onto the states, leaving local leaders from both parties grasping for ways to make up for billions in lost federal dollars. The cuts are already threatening to endanger governors’ education, public safety and disaster relief funds.
- And this is all happening as up to 20 state leaders face reelection in 2026, forcing them to figure out how to message the fallout as their parties battle for control over the House next year.
- It all amounts to a serious financial problem that’s even more acute for governors up for reelection next year. Many will have to decide between politically unpopular tax hikes or further changes to Medicaid that could kick more people off the program. State leaders have begun crunching numbers as they try to account for the looming funding gap.
- Democrats intend to slam Republicans in the midterms over their cuts to Medicaid and food assistance in order to pay for tax cuts that largely benefit the wealthy. That message will be a centerpiece of the minority party’s midterm strategy, and they’re anticipating voters will blame the GOP when they lose Medicaid coverage or experience the closure of a local hospital.
- Public polling shows the funding bill is widely unpopular. One recent Quinnipiac survey found 55 percent opposed the law compared to 29 percent in support.
- The Republican governors who publicly supported the bill now have an especially difficult situation. GOP-led states with large populations of low-income Americans rely the most on federal assistance and lack the tax base or political willpower to support any revenue increases.
- Repercussions from the megabill are unlikely to have any electoral bearing on the deep red states with upcoming gubernatorial elections. But it could pose problems for Lombardo.
- But when the bill was ultimately passed, Lombardo praised its no-tax-on-tips provision that influenced by Nevada and its thriving tourism economy, and said that while his administration assesses the bill “Nevadans should be excited about the potential impacts of tax cuts, investments in small businesses and American manufacturing, and efforts to secure the border.”
- Democrats who control the Nevada state legislature, however, believe that the legislation will create more harm than good, and when people start to lose their health insurance they will blame Lombardo for not speaking out more against the law. “It’s just too early to tell how bad it is, but from what we know so far, it is going to be a life and death situation for many folks,” said Fabian Doñate, a Nevada state senator.
