What happens to federal funding for Texas programs?

Most of what people picture as "federal funding" is Texans' own money taking a round trip to Washington and back, minus a cut and a set of strings. Independence keeps the programs and ends the round trip. Texas already administers nearly all of it.

Federal grants are Texans' money, returned with strings

The grants that flow to Texas for things like Medicaid, highways, and education run on the order of $60 to $70 billion a year, and the report counts every dollar of them as a real cost an independent Texas would carry. But understand what they are. That money came out of Texans' pockets first, went to Washington, and came back with conditions attached. An independent Texas does not lose that funding. It keeps the revenue at home and writes its own conditions.

Texas already runs the machinery

The programs do not live in Washington. They live in Austin. Medicaid is roughly a $51 billion program in Texas, and the state funds about $20 billion of it from its own treasury while the Texas Health and Human Services Commission administers the entire thing. Texas educates special-needs children through the Texas Education Agency and some 1,200 school districts. It runs its own environmental regulator, the TCEQ, mostly on state money. It builds its highways through TxDOT. The agencies, the workforce, and most of the funding are already Texan. Independence does not conjure these programs out of nothing. It puts the slice Washington still controls under the same roof as the government Texans already run.

The current deal short-changes Texas anyway

On most of these programs, Washington writes the rules and pays only part of the bill, and Texas covers the difference whether it agrees or not. Congress promised to fund 40 percent of the added cost of special education and delivers closer to an eighth, leaving Texas to find more than a billion and a half dollars a year. Federal law orders every hospital to treat anyone who arrives at an emergency room and sends nothing to pay for it, which cost Texas hospitals roughly $3 billion in unreimbursed care in 2023. Even the grants are not gifts. Federal highway and Medicaid dollars both require Texas to put up matching state funds, so much of what gets counted as Washington's spending in Texas was already paid for, in part, by Texans a second time.

The revenue is already here to replace it

This is the heart of the case. Texans pay about $453 billion a year to the two governments that tax them. Governing Texas, with every federal program folded in, costs about $295 billion a year. The money that currently funds these programs through Washington does not disappear at independence. It stops leaving in the first place. The same Texans who fund the programs now fund them directly, without the detour and without the membership fee.

The bottom line

Federal funding for Texas programs is Texans' own money on a round trip. Independence ends the round trip, keeps the programs Texas already administers, and lets Austin set the terms instead of paying for rules written in Washington.