Alabama at risk as federal funding cuts threaten health care, nutrition, education

Alabama could face significant funding losses if Congress moves forward with budget resolutions that propose deep cuts to Medicaid, food assistance, and other essential services. The reductions are part of broader efforts to finance tax cuts for corporations and high-income earners, renewing provisions from the 2017 Tax Cuts and Jobs Act.

If enacted, the cuts could affect hundreds of thousands of Alabamians who rely on federally funded programs. Medicaid, which covers nearly one in five state residents, could see reductions that result in lost coverage and stricter eligibility requirements. Food assistance programs such as the Supplemental Nutrition Assistance Program, SNAP, and the Special Supplemental Nutrition Program for Women, Infants, and Children, WIC, could also face budget constraints that impact low-income families. Other services at risk include school meal programs, the Child Tax Credit, and tax credits that help families afford health insurance under the Affordable Care Act.

Alabama Arise, a nonprofit organization advocating for low-income residents, has raised concerns about the potential consequences. Executive Director Robyn Hyden said the proposed cuts could disproportionately harm the state’s most vulnerable populations while preserving benefits for the wealthiest Americans.

“It’s wrong to hurt people who are struggling to help people who are already doing well. But Congress is expected to vote soon on budget and tax legislation that would do exactly that,” Hyden said in a statement Monday.

Alabama relies heavily on federal funding, receiving $2.01 for every dollar in federal taxes paid per capita in 2022. The state ranked as the nation’s seventh-highest recipient of federal funds, and reductions in those allocations could significantly impact government services at both the state and local levels.

Alabama received more than $14.5 billion in federal funds in fiscal year 2024, including:

• $8.1 billion for health and human services, including Medicaid, the Children’s Health Insurance Program, ALL Kids, Head Start, child care subsidies, child welfare services, HIV/AIDS prevention, opioid and substance use disorder treatment programs, and supportive services for older adults and people with disabilities.
• $2.86 billion for nutrition and agriculture programs, including SNAP, WIC, school meal programs, emergency food assistance, cooperative extension services, and agricultural research.
• $1.4 billion for transportation, including funding for highways, railways, airports, and bridges.
• $1.35 billion for education, including Title I programs, Pell Grants, special education programs, and 21st Century Community Learning Centers.
• $318 million for housing and urban development programs, including homeownership assistance, Community Development Block Grants, and programs to support people facing homelessness.
• $142.1 million for environmental protection, including clean water and air initiatives, pesticide management, and enforcement of hazardous waste disposal regulations.
• $110 million for fish and wildlife programs and other initiatives under the Department of the Interior.
• $92.4 million for the Tennessee Valley Authority.
• $82 million for workforce development programs, including jobs programs for veterans, unemployment insurance, and Workforce Innovation and Opportunity Act initiatives.
• $23.8 million for Department of Justice programs, including sexual assault investigations, crime victim support, and programs to prevent violence against women.
• $12.6 million for homeland security.
• $4.7 million for energy assistance and weatherization programs.
• $2.1 million from the National Endowment for the Arts.
• $1 million to support election administration.

The Tax Cuts and Jobs Act of 2017, which significantly reduced corporate tax rates and provided breaks for high-income earners, increased federal deficits by nearly $2 trillion over a decade, according to the Congressional Budget Office. While supporters of the tax law argued it would spur economic growth, projections from the Joint Committee on Taxation and the Tax Policy Center found that the revenue loss far exceeded any economic gains. Many provisions of the TCJA are set to expire this year, prompting debate in Congress over whether to extend them. To offset the cost of renewing the tax cuts, lawmakers are considering reductions in spending on federal programs.

Alabama Arise and 55 other organizations have urged the state’s congressional delegation to oppose cuts to programs serving low-income and working families. In a letter to lawmakers, the coalition warned that reductions in Medicaid, food assistance, and other services could have long-term economic consequences.

“The damage could be severe for hundreds of thousands of people across our state,” Hyden said. “These cuts could cause more economic harm in our state than in most others.”

A recent survey indicated that Alabama voters broadly support changes to the tax system that would shift more of the financial burden to high-income earners. Seventy-five percent of respondents supported raising taxes on large corporations, and an equal percentage supported increasing taxes on the wealthiest households in the country. Seventy-six percent favored raising taxes on individuals earning more than $400,000 annually, while 73 percent supported increasing the Child Tax Credit.

As Congress deliberates over budget priorities, Alabama’s representatives in Washington have yet to take a unified stance. Republican Senators Katie Britt and Tommy Tuberville have previously supported tax cuts for corporations, while the state’s House Republicans are considering their positions. The outcome of the negotiations could determine whether Alabama continues to receive the level of federal support that currently sustains critical public services.