By State Representative Rob Nosse
Happy New Year! Hopefully 2026 is a better year in politics than 2025 has been. At least there is an election coming.
Last month I promised to write about what bills are coming for the February legislative session, but the timeline for getting all that organized for legislators and the public is not working out for a January column. I will do a reveal in my February column. And since I have been a little negative lately, I promise to use the space I get for this column to lift up policy ideas that are attempting to make things better or resist the worst of President Trump’s policies.
Meanwhile I am stuck trying to mitigate HR1 the “One Big Beautiful Bill” while keeping Medicaid and health care whole.
Last month I talked about the state’s revenue forecast and the “One Big Beautiful Bill” implications for our budget with regard to what we have available to spend. I am going to stick with that topic for this month’s column as the state’s budget and tax structure will dominate the session.
As a reminder, that bill cuts taxes for the wealthy—though there are also tax cuts for overtime and tips as part of the bill; it pays for them by gutting Medicaid and Food Stamps, what we now call SNAP which stands for Supplemental Nutrition Assistance Program. One of my colleagues called it “a budgetary hand grenade” that will have major implications for the next six years for our state and these programs.
The state is estimated to lose $15 billion in federal funding for Medicaid and SNAP over the next six years. Not only will this make it harder for Oregon to care for and feed our people, but that money won’t flow to our local grocery stores, hospitals or medical providers, hampering economic activity and risking business closures at a time when we can least afford it.
That lack of funding from the federal government means shifting of significant costs for Medicaid and SNAP from the federal government to the states, both in terms of administrative responsibilities and funding if we want to maintain them in some manner like we have. As a result of the changes, the state’s responsibility for our current Medicaid and SNAP programs is expected to increase by $874 million in the 2027-2029 budget. In 2029-2031, our costs will increase by $1.7 billion. Finding that kind of money right now is really challenging.
The federal cuts hit Oregon in other ways as well. Because Oregon’s tax laws are tied to the federal tax code, we are tied to the tax cuts that HR1 creates. In late August this meant we had $900 million less to fund public services than previously projected. In late November there was an unexpected uptick in corporate tax payments. The immediate benefit is that our expected budget deficit of $370 million has shrunk to a deficit of just $63 million. We will see what the next quarterly report in early February brings. Will things get better or look more like they did in August? We shall see.
I tend to be someone who wants to maintain funding for Medicaid, SNAP and other government programs. Here are some of the tradeoffs I am wrestling with in order to balance the budget.
Should I allow you to save money on your taxes—as in NOT tax your overtime and tips for purposes of your state income taxes—or should I limit the overtime deduction to $10,000 and phaseout the break for single filers at $100,000-$125,000 and joint filers at $125,000-$150,000?
Do I limit your ability to itemize deductions by five percent, as in only allow 95 percent? (Itemized deductions are more common among wealthier filers.) Should I do away with the mortgage interest deduction on second homes?
Some businesses really want to have the full deduction for their depreciation all at once. Depreciation is when those deductions are taken over multiple years. Expensing is when they are fully deducted in the year incurred. Expensing is identical to 100 percent bonus depreciation. The changes made in HR1 do not change total deductions allowed but it did change when they may be claimed, by front-loading them. Do I take the budget hit all at once or spread it out for purposes of state income taxes?
If I allow that, I do not have enough money to cover the cost of food stamps that the state is now required to help cover and let me be clear the state will be covering the cost of food stamps it is now expected to bear.
So do I cut school days? Should I reduce the wage rates of low wage workers who take care of adults with intellectual and developmental disabilities? Should we not fund scholarships for medical education and reduce our eventual pool of physicians? Or do I close a prison and let people who have done bad things out of jail a lot sooner? These are the choices we are facing if we do not disconnect from the federal code as much as possible.
Do you see why my mood remains a C-? These choices are really hard, especially when I also read other headlines about how we need to grow our economy and create jobs and business investment. Stay tuned for February.
