Presented by CSG South through the Staff Alliance for Intergovernmental Leadership (SAIL)
States are preparing for a 2026 landscape that may bring changes in program administration, budget pressures, and operational priorities. Officials and staff are evaluating fiscal strategies, program planning, and long-term contingencies to maintain stability and flexibility in the year ahead.
To support this preparation, CSG South convened a panel of experts for “What’s Coming Down” for States: Fiscal and Program Impacts. The discussion examined potential shifts in program responsibilities, emerging budget pressures, and strategies that can help states navigate fiscal and operational challenges.
The panel featured Laura Bond, Manager of Administration for the Tennessee Comptroller’s Division of Property Assessments and Vice Chair of the 2025–26 SAIL committee; Dr. Larry Ash, economist and longtime leader in business, government, and academia; Kathryn Vesey White, Director of Budget Process Studies at NASBO; and Sophie Quinton, reporter at Pluribus News/State Affairs. Bond served as moderator.
Speakers highlighted key considerations for states as federal funding and policy signals evolve:
- Expect slower revenue growth. Many states project flat or minimal increases in general fund revenues, making careful budgeting essential.
- Monitor spending pressures. Rising healthcare costs, school choice initiatives, housing programs, disaster recovery efforts, and reduced federal funding require states to prioritize expenditures strategically.
- Watch federal policy changes. Grant freezes, agency restructuring, and major legislation, such as the One Big Beautiful Bill Act (H.R.1), can directly affect state budgets.
- Maintain rainy day funds. Reserves exceeding 5% of general fund spending provide flexibility during unexpected shortfalls or delayed federal funds.
- Stress-test budgets and forecast revenues realistically. Scenario planning and vigilant forecasting can help states avoid mid-year cuts.
- Evaluate program impacts. Federal rule changes may affect Medicaid and SNAP funding, requiring close attention to maintain balanced budgets.
- Plan for delays or temporary federal shutdowns. Contingency plans help sustain essential services.
- Use targeted strategies. Hiring freezes, selective spending cuts, and revenue adjustments help states navigate tighter fiscal conditions.
- Align policy carefully. Adopting federal tax provisions or program changes may affect revenue and flexibility.
Speakers provided clear, nonpartisan insights on factors affecting state budgets and programs, analyzed potential operational and fiscal impacts, and outlined considerations for scenario planning, contingency strategies, and targeted resource management. Their guidance offered practical tools for legislators, staff, and agency leaders working to anticipate and respond to shifts in 2026.
Watch the full webinar recording below to explore these insights in detail.