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Legislative review: federal reconciliation changes could cut $1.23 billion from SNAP, Medicaid over 10 years
Summary
Legislative staff told the LFC that federal reconciliation changes could reduce SNAP and Medicaid funding in New Mexico by roughly $1.23 billion over 10 years and urged state pilots, stronger outcome monitoring, and targeted workforce programs to blunt harm.
Legislative staff said on Jan. 28 that federal changes tied to the reconciliation bill could reduce New Mexico’s SNAP and Medicaid funding by about $1,230,000,000 over the next decade, warning that eligibility recalculations and added work requirements would both shrink rolls and increase administrative burdens.
The Legislative Finance/Services reviewers said the largest share of the estimated reduction — slightly more than $1 billion — is driven by Medicaid eligibility and work-requirement changes, with about $195,000,000 tied to SNAP adjustments. "Over the next 10 years, SNAP and Medicaid could see a $1,230,000,000 funding reduction," the report states, and flagged that changes to the Thrifty Food Plan and the formula used to calculate benefits would lower benefit levels for some households.
Why it matters: SNAP and refundable tax credits rank among the primary drivers of progress in New Mexico’s supplemental poverty estimates, the analysts said. The report recommends the legislature consider targeted pilots — such as monthly installments of the working families tax credit — and stronger monitoring of food security programs to measure whether recent investments produce intended outcomes.
The reviewers also highlighted high SNAP payment error rates as a fiscal vulnerability: "If the error rate is below 6 percent, then we will cover nothing; and if our error rate is above 10, we’ll cover 15 percent of programmatic costs," the presentation said, describing a federal look-back window that could trigger state cost-sharing. Reviewers pointed to Iowa and Tennessee as models for error reduction, citing case-review teams and stricter verification.
Health Care Authority Cabinet Secretary Carrie Armijo, who was invited to respond, said the agency accepts many of the recommendations and is preparing its FY27 budget and systems for the changes. "We will be addressing that," she said of payment error rates and other findings. Armijo added the state does not always interview Medicaid applicants and that SNAP interviews — reinstated after pandemic waivers — can be used to connect households to training and services.
What was recommended: The report’s next steps include improved outcome tracking for food-security programs, a pilot to test monthly delivery of the working families tax credit, and investments in short-term, in-demand credentials to help families cross benefit cliffs. Analysts noted New Mexico had appropriated $46,000,000 in a recent special session for income support, IT upgrades and food banks, but that monitoring and outcome data remain limited.
The committee did not take formal votes on the report during the hearing. The LFC presentation and HCA responses are expected to inform budget deliberations ahead of the 2027 legislative session.
