The Governor's Survival Guide: Three Hard Questions While Preparing for the One Big Beautiful Bill
Washington has a long history of making promises that states have to keep. Last year the Congress enacted sweeping legislative changes to welfare programs that are intended to reshape the relationship between federal and state governments. Governors across the country, regardless of party, must be prepared for doing more with less federal support.
The "One Big Beautiful Bill" represents the most significant restructuring of federal-state responsibilities in decades. While some details will continue to evolve until full implementation in 2028, one thing is clear: Medicaid block grants, unprecedented work requirements for Medicaid and stricter rules for SNAP, reductions in provider taxes, and a halving of federal funds for SNAP administration all point to the same reality, governors will be on the front lines without the federal resources they could rely on.
At this point, it isn't a partisan issue. It is a governance issue. Red states and blue states alike depend on federal funding streams that will soon be drying up.The question isn't whether you support or oppose these changes, it's whether your state is ready.
Here are three questions every governor should be asking their teams right now:
1. Do You Know Your Exposure for Federal Funding Reductions—And Your Fallback Plan?
Most states receive 30-40% of their total budget from federal sources, with healthcare representing the largest share. Medicaid is the largest line item in the state budget and depends on billions in federal matching funds that keep state budgets balanced.
What you need to know:
What would a 10%, 20%, or 30% reduction in federal Medicaid matching funds mean for your state budget? A 50% cut in SNAP administrative funding which requires no speculation?
What is your liability for SNAP error rates?
Do you have the legal authority and fiscal reserves to invest in new technologies and skilled contractors to prepare for the challenges?
Action item: Direct your budget office to create models of alternative approaches now. States that wait until the ax falls will be forced into crisis management mode, making reactive cuts rather than strategic adjustments and investments.
2. Can Your State Systems Handle Expanded Work Requirements and Verifying Compliance?
Work requirements are expanding across states’ two largest welfare programs—SNAP and Medicaid, and potentially others. While supporters argue this promotes self-sufficiency and critics raise concerns about discouraging applications for assistance, both sides should agree on this: implementation will fall largely on state agencies.
What you need to know:
Does your state have the IT infrastructure to track work hours and volunteer and training programs, as well as screening for exemptions across multiple benefit programs?
How will you choose qualifying activities and verify compliance for populations with non-traditional work (gig economy, seasonal employment, caregiving?)
Can your workforce training system absorb a surge of new participants who need job placement and training?
What happens to healthcare continuity when beneficiaries cycle on and off coverage due to paperwork gaps?
Action item: Conduct a readiness assessment of your eligibility systems and workforce agencies. Many states are still using legacy technology that struggles with current requirements, new mandates without new resources could create administrative collapse.
Action item: Establish a cross-agency implementation task force now. Include budget, health and human services, workforce development, IT, and legal counsel. If you wait for the bill to pass, you'll be months behind states that started planning early.
3. Is Your Local Safety Net Ready for Increased Costs - With Fewer Federal Resources?
Here's the paradox governors will face: when federal benefits become harder to access or retain, more people will turn to state and local safety nets including food banks, emergency rooms, free health clinics, and local assistance programs will see increased demand exactly when state budgets are tightened up.
What you need to know:
What is your state's capacity in emergency food assistance, free clinics, and charity care?
How will hospitals meet increased uncompensated care costs?
Do your counties and municipalities understand what's coming, and are they prepared?
What will happen to emergency room utilization if Medicaid coverage becomes more unstable?
Action item: Meet with hospital associations, free clinics, food banks, and local government officials. Create a coordinated response plan that identifies gaps and potential partnerships before the crisis hits. Consider bringing in a consultant with experience working with these players to design and execute the plan.
The Bottom Line
Governors didn't write the One Big Beautiful Bill, but they'll be responsible for making it work. History shows that major federal policy shifts create the most problems for states and there is no time to waste.
Whether you see these changes as long-overdue reform or dangerous cost-shifting, the preparation checklist is the same. The winners will be states that start planning now, that build implementation capacity before federal cuts and new mandates arrive, and that level with their citizens about what's coming.
The losers will be states caught flat-footed, forced to make panicked cuts and scrambling to stand up new systems under impossible deadlines.
The federal government may be rewriting the rules, but governors will be judged on the results. The time to prepare is now, while you still have options and contractors that can help implement your plans without long term staff investments.