As Oregon braces for potential federal troop deployments in Portland, state lawmakers in Salem spent the past week confronting another major challenge from Washington — the sweeping budget reductions tied to President Donald Trump’s federal reconciliation package, H.R. 1, dubbed the “Big, Beautiful Bill.”
The law, which overhauls federal spending and entitlement programs, could strip $15 billion from Oregon agencies over the next six years, according to state financial officials. Lawmakers met in a series of interim committee hearings between Sept. 29 and Oct. 1 to assess the fallout and consider possible responses.
“It’s critical that legislators, the public, and the press understand the onslaught of cuts and rollbacks that are coming,” said House Speaker Julie Fahey, D-Eugene, in a statement. “We need to know how these will affect Oregonians and what we can do to mitigate the damage.”
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The state already faces a $373 million budget shortfall, with agencies preparing for what could be the largest wave of federal disinvestment since the Great Recession.
Food Assistance Cuts to Hit Hundreds of Thousands
The Oregon Department of Human Services (ODHS) warned lawmakers that changes to the Supplemental Nutrition Assistance Program (SNAP) under H.R. 1 will strip food benefits from more than 313,000 Oregonians — nearly half of the 740,000 residents who currently rely on the program.
The federal law expands work requirements and removes exemptions for veterans, homeless individuals, refugees, and former foster youth. Families with older children will also lose access to certain benefits.
“This will be felt across the state,” said Nate Singer, director of the Oregon Eligibility Partnership. “We’re going to see more hunger and more hardship.”
Administrative costs are also rising. Starting in 2026, Oregon must cover 75% of SNAP administrative expenses, up from 50%. ODHS officials said nearly 90% of SNAP recipients are also on Medicaid, meaning families could lose both food and health coverage simultaneously.
“At the bottom line, hunger in Oregon will increase,” said Dana Hittle, senior advisor with ODHS.
Medicaid Facing Billions in Losses
Of the projected $15 billion in total cuts, roughly $14.8 billion will come from changes to Medicaid and SNAP. Under H.R. 1, Medicaid work requirements begin in 2027, affecting an estimated 700,000 Oregonians who rely on the program through Medicaid expansion.
To maintain eligibility, adults must work 80 hours per month or meet narrow exemptions for disability, pregnancy, or caretaking. Eligibility reviews will also become more frequent — every six months instead of every two years.
“These are repetitive, costly, and counterproductive bureaucratic processes,” said Sen. Deb Patterson, D-Salem, who chairs the Senate Health Care Committee. “The federal government is forcing Oregon to carry out harmful policies at our own expense.”
Oregon Health Authority (OHA) Medicaid Director Emma Sandoe said the state must design a new IT system to track work requirements, a process expected to start in January. Clinics warned lawmakers that thousands of patients could lose coverage, costing local providers millions in lost revenue.
Education and Early Childhood Programs at Risk
The ripple effects of SNAP and Medicaid reductions are expected to extend into the classroom. Oregon’s Department of Education said fewer children will automatically qualify for free and reduced lunch programs, which use SNAP enrollment as a proxy for eligibility.
“If fewer children qualify for SNAP, fewer may be certified, and that could reduce the number of schools eligible for federal meal reimbursement,” said Tenneal Wetherell, deputy operations director at ODE.
Cuts to Medicaid will also shrink funding for early intervention and special education programs, which depend on federal reimbursements. “Over time, this will limit our capacity and staffing,” said Stacy Michaelson of the Oregon School Boards Association.
Solar Incentives Slashed, Clean Energy Setback
Energy officials told lawmakers that the federal solar tax credit — once covering up to 30% of installation costs — will expire for residential projects in December and for commercial installations in 2027.
The Oregon Department of Energy also lost an $86.6 million “Solar for All” grant, rescinded under H.R. 1’s rollback of the Greenhouse Gas Reduction Fund. The cancellation jeopardizes 3,800 planned solar projects statewide and an estimated $88 million in lifetime consumer savings.
“This is devastating,” said Angela Crowley-Koch, executive director of the Oregon Solar and Storage Industries Association. “We expect to cut our workforce in half by 2026.”
Revenue Forecast: From Surplus to Deficit
The Legislative Revenue Office told lawmakers that Oregon’s general fund — once projected to show a $472 million surplus — is now expected to run a $373 million deficit. State economist Carl Riccadonna said H.R. 1’s tax changes are the main cause, with Oregon expected to lose nearly $1 billion in personal and business revenue this biennium.
“The options are to reduce spending, increase revenue, or use reserves,” said Chris Allanach, the state’s lead revenue analyst.
Meanwhile, Oregon’s automatic linkage to the federal tax code means residents and businesses will receive the same deductions and breaks enacted by Congress.
Derek Sangston with the Oregon Business and Industry association said the changes could “stimulate growth” by lowering tax burdens. But critics say the benefits are skewed toward the wealthy.
Daniel Hauser, policy analyst with the Oregon Center for Public Policy, argued that 1% of Oregonians — those earning over $745,000 annually — will receive an average tax cut of $43,000 per year, while low-income families will see only about $70 in savings.
“If we don’t act,” Hauser warned, “hundreds of millions of dollars will need to be cut from services Oregonians depend on.”
Governor Kotek Urges Statewide Response
Governor Tina Kotek has convened working groups to explore options for protecting Oregonians from the federal cuts, especially in Medicaid and nutrition programs.
“We’re all going to have to come together before the 2026 session,” Kotek said. “The federal government is taking our tax dollars and using them to hurt Oregonians. We need to be creative, proactive, and united in response.”
With billions at stake, legislators say the coming months will define Oregon’s fiscal future — and determine how the state weathers what some are calling the most dramatic federal retrenchment in decades.
