When Gov. Wes Moore of Maryland signs his state’s budget into law as soon as Tuesday, it will signify the end of a difficult saga in which local leaders cut spending and raised some fees just to close a larger-than-expected $3 billion deficit.
But Mr. Moore, a Democrat, is already bracing for the next fiscal fight. Maryland and its finances are highly influenced by the federal government, and the Trump administration is looking to cut vast swaths of the aid it sends to states.
“We just made in Maryland the largest cuts to our budget in 16 years,” Mr. Moore said in a recent interview, adding that the steep cuts being contemplated in Washington could quickly prove “deeply damaging.”
Across the country, state leaders are beginning to express alarm about the budgetary fallout from President Trump’s economic agenda, warning that they will not be able to pick up the bill if the federal government reduces its funding for major public services. To governors and other officials, many of whom are Democrats, the fear is that Washington could sharply curtail federal programs that help states improve their infrastructure, respond to natural disasters, expand education and provide a suite of health, housing and nutrition benefits to the poor.
Republicans have framed their thinking as a matter of fiscal necessity and federalism, arguing that states should shoulder more of the financial burden for their citizens at a time when the national debt exceeds $36 trillion. But Mr. Trump has made no secret about the fact that many of his preferred budget cuts are meant to help offset his costly and ever-expanding legislative ambitions, including his desire to cut taxes.
In recent weeks, Mr. Trump has suggested that Washington could provide less to states in response to major storms, forcing local officials to assume more recovery expenses. His new budget proposed scaling back federal aid to states on programs varying from public education to mental health. And Republicans in Congress this week proposed forcing local governments to assume a greater share of the costs for food stamps and other federal anti-poverty programs.
For states like Colorado, which recently shrank its spending to close a roughly $1 billion deficit, a sharp decrease in federal funding could result in even more staggering cuts. Gov. Jared Polis, a Democrat, pointed to the example of Medicaid, the federally backed program managed by the states that provides health insurance to low-income families.
If congressional Republicans sharply reduce the amount they reimburse states for Medicaid, as some lawmakers have proposed, then Colorado is unlikely to be able to pick up the entire bill, Mr. Polis said. The result, he added, likely would be “hundreds of thousands of Coloradans losing the health care they have today.”
On Sunday, House Republicans released a draft plan for Medicaid that would limit states’ future ability to tax hospitals and other medical providers, a move meant to undercut a strategy that has historically helped those officials obtain federal funding.
At least eight states have warned in the meantime that they expect revenue disruptions on the horizon because of federal uncertainty, according to an analysis by the National Association of State Budget Officers. Some specifically cited spending cuts and other federal developments, including Mr. Trump’s global tariffs, as a source of their complicated fiscal predicaments.
Brian Sigritz, the director of state fiscal studies at the organization, said many states were also projecting less revenue growth and “will not be able to absorb the federal cuts” Republicans are pursuing.
The dynamic highlighted the difficult and consequential math facing Mr. Trump. Every fiscal change that he and his party is contemplating could carry significant ripple effects throughout the economy, affecting the public services on which millions of Americans and businesses rely.
Issuing his first budget since returning to office, Mr. Trump this month called for a sweeping retrenchment in Washington. The Trump administration proposed $163 billion in cuts targeting a staggering array of federal climate, education, health and housing programs, while increasing military spending and funding the president’s pledge to conduct more aggressive deportations.
Explaining the recalibration, Russell. T. Vought, the White House budget director, denounced broad categories of federal spending as wasteful or “woke.” Mr. Vought added that some of the proposed cuts reflected a belief that federal services “could be provided better by state or local governments (if provided at all).”
Under the banner of “revitalizing federalism,” the Trump administration recommended slashing $4.5 billion in education funds under a structure that White House officials have said “empowers states.” Mr. Trump also targeted more than $1 billion at the Environmental Protection Agency, and argued that its pollution-reducing grants had become a financial “crutch for states.”
And the administration looked to strip $2.4 billion from a federal program to help local officials finance clean water improvements. The president’s budget posited that states “are responsible for funding local water infrastructure projects, not the federal government.”
“It’s astounding, and what they said with it was, ‘You’ve had enough already. You should have rebuilt all your infrastructure,’” said Deborah B. Goldberg, the state treasurer of Massachusetts, on a call this week organized by an advocacy group for Democratic finance officials. “Well, every state has aging infrastructure, and you can’t rebuild it all at once.”
A spokeswoman for the White House budget office did not respond to a request for comment.
David Ditch, a senior analyst in fiscal policy for the Economic Policy Innovation Center, a conservative group, described the president’s strategy as a necessary corrective, citing the fact that Washington is already borrowing too much. “That money is extremely costly now,” he said, referring to high interest rates.
Mr. Trump’s budget threatened to leave states in a “precarious position to backfill billions of dollars for people, and to be frank, states can’t do that,” said Kim Johnson, the senior director for public policy at the National Low Income Housing Coalition, which supports greater federal spending on rental assistance.
Under Mr. Trump’s budget, housing programs would be cut by $26 billion next year, as part of an overhaul meant to shift more of the burden of managing rental assistance to the states. Many states already have outsize demand for these programs, and Ms. Johnson said that few would have the resources to absorb the loss of billions of dollars in federal aid.
“There is absolutely no doubt in my mind that if this proposal were to go forward, there would absolutely be people losing their assistance,” Ms. Johnson added.
Mr. Trump’s budget is not law, and it ultimately falls to Congress to set the nation’s spending levels. Republican lawmakers have eagerly embraced the president’s cost-cutting philosophy, as they scramble to reduce spending and find ways to offset the price tag of their tax package.
House Republicans have looked to extract significant savings from safety net programs, including the Supplemental Nutrition Assistance Program, or SNAP, which aims to combat hunger. Under a blueprint released late Monday, party lawmakers proposed forcing states to assume some costs of providing nutrition benefits beginning in 2028. Historically, these food stamps have been federally funded.
“Their plan is just to push a bunch of these costs over to the states, and it’s going to force states, of course, to cut benefits, eligibility or both,” Senator Amy Klobuchar, a Democrat from Minnesota, said on Tuesday.
G.O.P. lawmakers have also targeted Medicaid, considering at times whether to limit the amount they reimburse states for covering low-income patients. While Republicans have dialed back some of their earlier, more aggressive proposals to cut the program, they still have tried to rethink some of the financing in Medicaid so that they can extract more than $800 billion in health-related savings over the next decade to pay for their tax ambitions.
“We are prepared to stop the billions of dollars in waste, fraud and abuse in the Medicaid program by beginning to rein in the loopholes,” said Representative Brett Guthrie, a Republican from Kentucky and chairman of the House Energy and Commerce Committee. The panel convened Tuesday to start considering the Medicaid changes, which drew early protests from program supporters.
Studying a menu of early options, the nonpartisan Congressional Budget Office found in an analysis released earlier this month that state budgets would be able to absorb some, but not all, of the financial blow from a loss in federal funding, likely resulting in millions of people losing benefits.
In an updated report published by Democrats, the spending watchdog concluded that about 8.6 million people could lose insurance from the full suite of health changes that congressional Republicans seek. That figure could rise to 13.7 million if another set of federal health subsidies are allowed to expire at the end of the year, as planned, the analysis found.
“With the magnitude of the reduction in federal financing for Medicaid, it seems like it would be very challenging for states to make up and offset that amount and that magnitude of reduction,” said Robin Rudowitz, the director of the program on Medicaid and the uninsured at KFF, a nonprofit health policy research group.
Facing the potential loss of billions of dollars, a growing roster of state leaders had sounded alarms even before Republicans released that Medicaid plan, stressing that they cannot make up for a significant shortfall in federal support.
“We don’t have the ability to backfill any loss of federal funding,” Mr. Polis said.
