Public budgets and the revenue systems that support them are some of the most important policy instruments of our government. They reflect our values and priorities through decisions on how to tax residents and businesses and spend these collective resources. These decisions impact what families have to spend on basic needs and invest in their future, define the size of the government and its role in the national economy, and affect the lives of all Americans. EOF hosts an Annual Budget and Tax Briefing to explore why federal and state budget and tax work matters to national, state, and local philanthropy.
See a summary of the second plenary session from our 2025 Budget and Tax Briefing below.
2025 State Budget and Tax Outlook
State budgets are set to shrink significantly in 2025, as the era of post-pandemic federal aid, record spending, and tax cuts comes to an end. Anticipated cuts to Medicaid, Supplemental Nutrition Assistance Program (SNAP), and other federal safety net programs will shift costs to states, forcing policymakers to choose between raising taxes or cutting spending. How are states working to address these challenges? In three fireside chats with funders and advocates from Washington, D.C., Ohio, and New York, we’ll hear how advocates have successfully championed laws to increase taxes on the wealthy and corporations to fund critical investments in education and early childhood; documented the harm and impact of repeated attacks on the state income tax; and are working proactively to explain the impact of federal cuts in 2025. Learn how these advocates are exposing the harm caused by inadequate and inequitable revenue systems — and making the case for a more equitable path forward.
Michael Cassidy
Director, Policy Reform and Advocacy
The Annie E. Casey Foundation
Marcia Egbert
Program Director
The George Gund Foundation
Nathan Gusdorf
Executive Director
Fiscal Policy Institute
Hannah Halbert
Executive Director
Policy Matters Ohio
Abriana Kimbrough
Program Officer
Washington Area Women’s Foundation
Kimberly Perry
Executive Director
DC Action
Video Recording + Slides: The video recording and slides for this session are available by request to grantmakers who work for a qualifying philanthropy. Contact Cema Siegel at [email protected] for more information.
Framing:
As the Trump administration doubles down on its plans to make sweeping changes to federal budget and tax policy, all eyes are on the states to see how they’ll respond. Ensuring that voters understand how cuts to federal programs may impact them personally and ensuring state policymakers understand how federal cuts impact their constituents will be especially important for equipping states with the tools and organizing power they need to push back against harmful changes at the federal level. While it may feel like an uphill battle, state advocacy groups have made strides in recent years to make their tax codes more progressive and mitigate the burden of harmful federal policy changes on families and communities. Learning from these states can help other states replicate what’s working and scale their actions on a national level to create broad change.
Recap:
At the heart of any successful advocacy effort is often a strong coalition. One such example is in Washington, D.C., where a team of advocates for children and families quickly recognized the need for a revenue strategy to support their efforts to improve pay for childcare workers and make childcare more affordable. They partnered with tax and budget advocates to form Under 3 DC, a broader coalition centered on improving outcomes for workers and their families across the District. The coalition used polling and voter mobilization to demonstrate to the D.C. Council that these issues were a priority for voters and leveraged fiscal analysis from its budget partners to prove that there were viable mechanisms to fund the coalition’s policy goals. Ultimately, the coalition succeeded in achieving its goals, and although they anticipate another fight for working families this year, coalition leaders feel confident in their strength in numbers as more organizations, communities, and residents join the fight.
In Ohio, a coalition of advocates has been partnering for more than 20 years to fight off recurring proposals to institute a flat tax, which would disproportionately benefit higher-income earners across the state. While much of this work has been defensive, it has also yielded a few offensive wins along the way: the state’s current Republican governor has vocally opposed any income tax cuts and proposed enacting a refundable Child Tax Credit. Similar to D.C., tax and budget advocates in Ohio have teamed up with advocates for children and families to ensure fair school funding, affordable and accessible childcare, and other priorities that wouldn’t be possible if state policymakers succeeded in cutting taxes. Advocates credit the coalition’s success in part to funders who were willing to take risks and fund defensive strategies, as well as commit to long-term funding that enabled coalition building and other important groundwork to happen.
In New York, tax and budget advocates were quick to discover that state policymakers often lacked a holistic understanding of federal funding in the state budget, leaving them ill-prepared to fight back against impending federal budget cuts. In response, they drafted a detailed memo and provided live briefings on how the state’s budget is structured, how much comes from federal funding, and how proposed federal cuts would impact New York residents—especially in healthcare, education, childcare, and social welfare. For example: New York has a total population of 20 million, of which 9 million are enrolled in Medicaid or Medicaid-related expansions authorized under federal waivers. Illustrating the important of federal funding for these programs—which directly or indirectly benefit virtually everyone in the state—has been an especially powerful strategy for building support for the program among the state’s policymakers.
Although the future of the federal budget and tax policy agenda remains uncertain, one thing is clear: since the first Trump presidency, momentum has been growing in the states to build sustainable coalitions that strengthen state tax codes and mitigate the burden of harmful federal actions. Funders can support these efforts through long-term partnerships that foster coalition building, being willing to fund defensive strategies just as often as proactive ones, and supporting storytelling efforts that humanize the impact of budget and tax policy decisions made at the federal level.
Shifting federal costs to states who operate completely different fiscal environments provides enormous long-term threats to families and kids and communities.
— Michael Cassidy, The Annie E. Casey Foundation
What it really boils down to was working together to be comfortable broadening the definition of what constitutes a win. A lot of the policy work has a clear, proactive goal. But it really took some intentional conversations and dialogue to say that defensive work is every bit a win. Behind every mitigated harm, behind every blocked or delayed bad policy is a child or family. Or community. And that is such a profound win to prevent them from being further harmed. Or to prevent the harm from starting.
— Marcia Egbert, The George Gund Foundation
We’re not just going to throw up our hands and say we are going to suffer under the heel of the presidential administration.
— Nathan Gusdorf, Fiscal Policy Institute
If we get things to the people, and know how to organize and empower with people and community, we are going to win.
— Hannah Halbert, Policy Matters Ohio
We are not deterred. We feel stronger than ever. Every single time there is a fight, it catches someone else’s attention, a new organization, a new set of residents, a new community, so it only allows us to get stronger.”
— Kimberly Perry, DC Action
Related Resources:
- Tracking the Fallout From State Tax Cuts: This new resource from the Center on Budget and Policy Priorities features stories, case studies analyses of the latest tax developments related to state tax cuts.
- PEW Fiscal 50: State Trends and Analysis: This interactive resource from The Pew Charitable Trusts, allows you to sort and analyze data on key fiscal, economic, and demographic trends in the 50 states and understand their impact on states’ fiscal health.
- Urban Institute State Fiscal Briefs: National recessions and federal tax and spending changes can affect budgets in all 50 states and the District of Columbia. And big policy questions, such as whether to increase teacher salaries or expand health care access, can pop up in many states at the same time. But each state faces unique economic, political, cultural, and historical pressures that affect how fiscal issues emerge and how problems are resolved. That’s why the State and Local Finance Initiative put together these 51 briefs, detailing the dynamics that influence major policy issues in each state.
- Read State Revenue Alliance’s one-page factsheets on tax coalition work happening in 28 states that give an overview of each state’s key partners, plans, priorities, victories, and funding needs.
- Washington Area Women’s Foundation established the DC Early Care and Education Funders Collaborative in 2008, as a multi-year, multi-million dollar collective funding effort to work on early childhood systems-change across six jurisdictions in the Washington, DC metropolitan area.
- Learn more about DC Action’s efforts with the Under 3 DC Coalition to protect the Pay Equity Fund
- Read this Under 3 DC report comparing the cost and benefits of the Pay Equity Fund.
- View the Under 3 DC guiding principles for decision making regarding revenue policies that will lead to the funding of world-class, well-coordinated systems of early care and education so all DC families can flourish.
- Policy Matters Ohio explains the impact of decades of tax cuts for the wealthy and provides recommendations for the revisions needed to make the tax code work for everyday Ohioans.
Many thanks to our 2025 Watch Party Hosts!
