September 9 Staff Report - Update to Board on H.R. 1 (One Big Beautiful Bill Act)

Link to Full Informational Report

Link to PowerPoint presentation

September 9, 2025

Marin County Board of Supervisors
3501 Civic Center Drive
San Rafael, CA  94903

SUBJECT: Information Report on local impacts of federal policy changes under H.R. 1 - One Big Beautiful Big Act

Dear Supervisors:

RECOMMENDATION: Receive report.

BACKGROUND: On July 4, 2025, President signed H.R. 1, the One Big Beautiful Bill Act (OBBBA) through the Budget Reconciliation process. The legislation permanently extends 2017 tax cuts while reducing or restructuring federal investments in health, social services, climate, housing, and immigration. The Congressional Budget Office projects a $3.4 trillion increase in the national deficit over 10 years.

While state and local agencies are still determining the impacts of the bill – especially since some of the most significant fiscal provisions take effect in late 2026 – state lawmakers have been preparing for the significant loss of federal funding. In the Legislature’s first Budget Subcommittee hearing after H.R. 1’s passage on August 20, 2025, lawmakers stated that California cannot realistically replace all lost federal funding as a result of the bill. Marin County agencies are also assessing impacts and contingency plans, however much will hinge on how the state responds.

It is important to note than much of how OBBBA’s new provision will actually be implemented remain unknown. Key questions include how states and counties will verify new Medicaid and Supplemental Nutrition Assistance Program (SNAP) work requirements, how California will adjust its significant unbalanced Managed Care Organization (MCO) tax, and how the federal government will distribute funding from the new $50 billion Rural Health stabilization fund. Guidance on these provisions is still pending from the federal Department of Health and Human Services (HHS) and Centers for Medicare and Medicaid Services (CMS).

SUMMARY: The attached informational report was prepared with input from Marin Health and Human Services, the County’s Sustainability Team, Transportation Authority of Marin, Marin Clean Energy, and Aliados Health (representing Marin’s four Federally Qualified Health Centers). The intent of the report is to be informational, and staff will keep your Board apprised as more implementation guidance is released from the federal government, and the state’s fiscal and policy response takes shape.

Healthcare and Social Safety Net

• Marin has 54,000 Medi-Cal enrollees, including more than 11,000 with unsatisfactory immigration status (UIS). OBBBA’s new 80 hour/month work requirements, 2x as frequent eligibility checks, $35 copays, reduced retroactive coverage, and Covered California subsidy rollbacks will increase local uninsured rates – and uncompensated care. The bill’s reduced federal matching rate for immigrant residents who utilize local emergency rooms from 90% to 50%, as well as the shortened retroactive coverage from 3 months to 1 month after enrollment, will also significantly increase uncompensated care.
• Limits on how Managed Care Organization (MCO) taxes are used likely means California will lose much of the $7-8 billion in federal funding annually that the current tax structure brings in.
• CalFresh/Supplemental Nutrition Assistance Program (SNAP): More than 15,000 Marin residents receive “food stamps” assistance through CalFresh. OBBBA mandates a new 80 hours/month work requirement and reduces overall benefit adjustments. SNAP-Ed nutrition education programs in local schools (that reach 10,000–12,000 residents annually) are eliminated.
  • New cost-sharing formulas reduce total SNAP administrative costs provided to states, cutting the current cost share from 50% to 25% federal. For states with payment error rates >10%, the federal cost share could reduce further to 10% (California’s payment error rate last year was 11%).

Climate, Energy and Transportation

• Phase-out of federal credits for rooftop solar, home batteries, and heat pumps by 2028 will reduce affordability of local rebate programs like through Electrify Marin. Local solar installation contractors will also be affected.
• Elimination of the $7,500 federal electric vehicle (EV) credit will make EVs less affordable especially for low- and moderate- income households. MCE has reported a 4x increase in EV rebate applications since the passage of the bill, as residents have aimed to lock in the last few months of the credit.

Other implications

• State and Local Taxes (SALT) deduction cap rises from $10,000 to $40,000 until 2029, benefitting higher-income property owners and taxpayers.
• Child Tax Credit modestly increases, but children in mixed-immigration status households (e.g. one or more parent does not have a social security number) are excluded.
• Permanent expansion of the Low-Income Housing Tax Credit (LIHTC) could be positive for affordable housing projects, though accompanied by loss of other complementary funding streams.
• Significantly increases Immigration and Customs Enforcement (ICE) budget to expand detention capacity, border security, and worksite enforcement.
• Increases fees for immigration procedures, including significant additional costs on applicants for asylum, Temporary Protected Status, parole, visas, and employment authorization.

In response, state leaders are beginning to plan mitigation strategies for the loss of billions of federal Medicaid revenue, paired with the increase in uninsured residents and uncompensated care across the state. California currently receives $98 billion in federal revenue for Medi-Cal, so even a 10% decrease will be significant hit. Strategies include options to restructure the Managed Care Organization tax (though challenging with the 2024 voter-approved Proposition 35, which locked in the MCO tax structure), and seeking extensions to delay implementation timelines. As part of the FY 2026 State Budget, lawmakers already froze Medi-Cal expansion enrollment for immigrants with unsatisfactory status and restored the Medi-Cal asset limit in anticipation of federal changes. Locally, Marin’s Federally Qualified Health Centers are expanding outreach and enrollment teams to help residents navigate new eligibility and work requirements, while contingency planning for uncompensated care and free clinic services. Food banks are also expecting an increase in usage.

To protect California’s climate progress, Sacramento policymakers are considering backfilling federal cuts to green energy and climate programs through Cap and Trade reauthorization, and Proposition 4 (2024 Climate Bond). Cap and Trade is expected to be reauthorized either before the end of the current Legislative session, or carried through to the 2026 session. Proposition 4’s expenditure plan was approved by votes, but within the various programs there is flexibility for the Legislature and Administration to determine where the funds are directed.

Collectively, these efforts underscore the urgent need for coordinated state and local advocacy to protect vulnerable residents, sustain climate progress, and stabilize safety-net providers.

EQUITY IMPACT: There is no doubt that OBBBA disproportionately impacts Marin’s most vulnerable populations. This includes immigrants and other non-traditionally employed low-income residents who will face heightened barriers in enrolling and maintaining health care coverage and food assistance, and will have less financial support paying off recent medical debts with reduced retroactive coverage once enrolled.

Providers serving Marin’s unhoused residents will be challenged to ensure clients meet the programs’ new work requirements, and uncompensated emergency care for this high-need, medically vulnerable population will also increase. For these residents, recent progress in improving health outcomes with access to primary care providers and other basic care access may be reversed – as residents lose coverage and likely return to an over-reliance on emergency medical care, including increasing instances where County and City emergency responders are called.

FISCAL IMPACT: The fiscal impacts of OBBBA on Marin County are expected to be significant but remain difficult to quantify until federal and state implementation guidance is released. Counties that operate public hospital systems, such as Santa Clara and San Mateo, are already projecting immediate reductions in Medi-Cal reimbursements and preparing for significant budgetary shortfalls. While Marin does not operate a county hospital, these programs still bring in a significant amount of federal revenue to County operations (FY 2023-24 revenues):

• Medi-Cal: $17M
• CalWORKs: $11M
• CalFresh: $8M

Additionally, local impacts are anticipated through increased uncompensated care at Federally Qualified Health Centers, rising reliance on the County Medical Services Program (CMSP), and reduced federal reimbursement for County-administered eligibility and social service programs. Cuts to CalFresh and CalWORKs will heighten pressure on County-administered safety net services and nonprofit partners.

It is important to note that most of these provisions do not take effect until October 2026, giving Marin and other counties time to prepare and assess the scale of impacts given the state’s pending response. However, the trajectory is clear: counties will face heightened fiscal exposure through higher program cost (especially in the state reduces their non-federal cost share in response), higher levels of local uncompensated care, and growing reliance on limited local resources. 

Sincerely,

Talia Smith
Interim Deputy County Executive

Ahmed Ismail
Chief Fiscal Officer

Attachment 1: Informational Report on H.R. 1 – One Big Beautiful Bill Act (OBBBA)