State Tax Cuts Are Leaving Counties to Cover New SNAP Costs

In 2025, the federal government passed the harmful mega bill, H.R. 1, making deep funding cuts to SNAP while shifting new costs onto the state. At the same time, more than a decade of state income tax cuts have left North Carolina losing almost $18 billion in revenue each year, just as the state is required to take on these new costs.  

H.R. 1 should have been a wake-up call that North Carolina cannot continue cutting income taxes while meeting the needs of working families. 

Instead, the new state budget preserved tax cuts for wealthy households and profitable corporations while blindsiding counties by shifting state SNAP benefit costs onto them — costs they have far fewer tools to cover.  

In doing so, state leaders have chosen the interests of the wealthy over the nearly 1.3 million North Carolinians who rely on SNAP to put food on the table.

State leaders are shifting state SNAP costs onto counties 

The state budget forces counties to pay even more of the new SNAP costs created by H.R. 1 than it actually requires.  

For the first time in the program's history, H.R. 1 could make the state liable for 5 percent to 15 percent of SNAP benefit costs depending on the payment error rate — the share of SNAP dollars issued incorrectly due to unintentional administrative mistakes. Starting October 2027, North Carolina could owe up to $140 million in SNAP benefit costs, based on recent error-rate data. 

While H.R. 1 allows the state to avoid these costs by reducing its payment error rate below 6 percent, state leaders are asking the very counties responsible for reducing errors to also pay the state’s future SNAP benefit cost obligations. 

How will the state make counties foot the bill? 

The state will withhold a portion of each county’s sales tax revenue to cover the state’s new SNAP benefit costs. Every county will lose some sales tax revenue under this policy, regardless of its SNAP participation or contribution to the state’s payment error rate. Counties that have more sales tax revenue and contribute more to the state’s payment errors will owe even more.

Counties are being put in an impossible position 

Since H.R. 1 was enacted, about 105,000 fewer North Carolinians are receiving SNAP benefits.¹Data from the United States Department of Agriculture indicate that almost 180,000 fewer North Carolinians are receiving SNAP since H.R. 1 was enacted. (Estimates from Dottie Rosenbaum, Joseph Llobrera, Catlin Nchako  and Luis Nuñez, SNAP Tracker: People Are Losing Food Assistance as the Republican Megabill Is Implemented, Center on Budget and Policy Priorities, Updated June 22, 2026, https://www.cbpp.org/research/food-assistance/snap-tracker-people-are-losing-food-assistance-as-the-republican-megabill.)  During an affordability crisis, when the state should be doing everything it can to keep more families from going hungry, state leaders are choosing to put the future of food assistance at greater risk. They are asking counties to do the impossible: 

• Pay the state’s new SNAP benefit costs; 

• Cover tens of millions in new SNAP administrative costs; 

• Deliver a more complex SNAP program; and 

• Reduce payment errors to help the state avoid future SNAP benefit costs 

And at the same time, state leaders have proposed a constitutional amendment that would further limit counties’ ability to raise the local revenue needed to do any of it.  

Counties cannot avoid new SNAP benefit costs on their own 

The only way for counties to avoid taking on benefit costs is for the statewide payment error rate to fall below 6 percent. This means counties cannot avoid these costs simply by improving their own payment errors. Yet, state leaders are reducing the very capacity that counties need to eliminate those costs by requiring counties to cover new SNAP administrative costs and a share of benefit costs until the error rate drops. 

Families in smaller rural counties will be hit harder 

No family’s access to food assistance should depend on whether their county can afford to pay the state’s SNAP costs. But that is exactly the direction state leaders are taking. 

By requiring every county to help fund ongoing benefit costs and new administrative costs, the state is making continued access to food assistance increasingly depend on a county’s ability to pay. That means smaller rural counties, where more families rely on SNAP, are being asked to shoulder new state costs despite having fewer resources to cover them. 

State costs shouldn’t be passed onto counties 

• H.R. 1 shifts SNAP benefit costs onto states — not counties. State leaders chose to create a convoluted system to pass those state costs onto counties instead of asking higher-income households and profitable corporations to contribute more through state income taxes. 

• The federal payment error review process was never designed to determine what any one county should pay. It calculates the state’s payment error rate using a small sample of SNAP cases and the dollar value of the payments found to be issued in error. Since counties are not equally represented in the sample, it is an arbitrary way to assign county benefit costs. One county may owe little simply because none of its cases were reviewed. Another county’s bill could be high because of a single large payment error, even if it does not reflect the county’s overall performance. It is unclear how the state could fairly implement this county cost-sharing policy. 

• County sales tax revenue says little about a county’s ability to absorb state costs. The benefit cost sharing system requires counties with larger shares of sales tax revenue to pay more, even though sales tax collections do not measure a county’s capacity to cover new costs. For example, counties with smaller property tax bases may rely more on sales tax simply because they have fewer revenue options. It doesn’t mean those counties have excess resources to take on state responsibilities.

More costs with limits on revenue is a recipe for disaster 

Leaving counties to pay new SNAP costs is even more concerning because state leaders have put constitutional revenue limits on the ballot in November. These limits would constrain both county and state budgets. 

Together, nearly 60 percent of county revenue statewide comes from sales and property taxes, yet state policy would constrain both. The proposed property tax levy limit would restrict counties’ largest source of revenue, while the SNAP benefit cost shift would divert more of their sales tax revenue. 

At the same time, state leaders are asking voters to approve the income tax cap amendment, which would permanently limit the state’s ability to raise income tax revenue. With fewer options to fund SNAP and other essential services, the pressure to shift costs onto counties may only grow.  

Ending hunger should be a commitment state policymakers fund 

Hunger hasn’t gone away, and grocery prices continue to rise. This is the moment for North Carolina to make sure families can count on accessing food assistance no matter where they live — not ask counties to take on a responsibility that only the state has the tools to raise revenue for. 

State leaders can still reverse course. North Carolina can reverse recent income tax changes, ask the wealthy and profitable corporations to pay what they can afford, and rebuild the state’s capacity to address hunger and hardship.  

Today’s revenue constraints are a choice. Continuing down this unsustainable path will only result in more hardship, more hunger, and less certainty that families can receive food assistance when they need it most.