A store displays a sign accepting Electronic Benefits Transfer, or EBT, cards for Supplemental Nutrition Assistance Program purchases for groceries on Oct. 30, 2025 in New York City. (Photo by Spencer Platt/Getty Images)
North Carolina lawmakers learned how coming federal cuts to SNAP benefits could affect the state’s bottom line during an oversight panel hearing Tuesday.
President Donald Trump signed the “One Big Beautiful Bill Act” into law last summer, a sweeping spending and tax cut package that will cut federal funding for the Supplemental Nutrition Assistance Program by 20% over the next decade — the largest cut to the program to date, according to a Harvard Kennedy School of Government analysis.
About 41 million Americans and 1.35 million North Carolina residents rely on SNAP benefits.
Other changes in the OBBBA will transfer some of the program’s costs from the federal government to the states, with higher costs for states that don’t meet stringent new requirements for eligibility verification.
“It created a new error rate state match, and this is going to be concerning for the vast majority of states,” Leslie Ford, a senior fellow at the right-leaning Alliance for Opportunity, told lawmakers.
Starting in fiscal year 2028, states must have an error rate under 6% to receive full federal funding for their SNAP benefits. A 6% error rate would mean six out of 100 SNAP eligibility enrollments contained mistakes.
If a state’s error rate is at or above 6%, they must pay a percentage of the costs for their food benefits. The percentage they pay increases as the error rate grows higher.
If a state can’t or won’t pay its required share, federal funding will also be withheld, effectively shuttering SNAP in that state.
“Why is Congress looking at this? It’s because we’ve seen the SNAP error rates spike substantially,” Ford said.
North Carolina reported a 10.21% error rate for fiscal year 2024, meaning the state would be responsible for 15% of SNAP costs if that level of error continues. This would be about $433 million per year.
Rep. Grant Campbell (R-Cabarrus) asked about preventing similar issues in the future.
“We weren’t aware of this error rate,” he said. “Are there other problematic things in the administration or distribution of this program that we need to be looking at now?”
Mike Leighs, deputy secretary at the North Carolina Department of Health and Human Services, said error rates have historically increased when there are changes in policy, as there were during the Biden administration and coming out of the pandemic.
“This really isn’t a measure of fraud,” he said. “This is really an inaccurate eligibility determination.” For example, people may have been receiving benefits that were too high or too low, Leighs explained.
Looking at fiscal year 2025, the state’s error rate is at 7.05% through August — much improved over the earlier 10.21%. Leighs said they’re making progress toward the goal of less than 6%, but he also cautioned that it isn’t yet clear which fiscal years the federal government will use to determine states’ compliance.
Andy Ellen, president and general counsel at the N.C. Retail Merchants Association, said food aid is vital for some areas of the state, and a full shutdown of the program could cost the state 7,000 jobs, from retail to agriculture to logistics.
Ellen said shuttering the program would be especially damaging to businesses in counties with high SNAP participation rates, like Robeson County, where nearly a third of residents rely on federal food assistance.
“SNAP is not supplemental in many counties. It is what stabilizes your local food economy,” he said. “It’s what makes that grocery store have the ability to stay open.”
Generally, Ellen said, grocery stores run on thin margins, making perhaps a 2% profit. Many lower-income counties are also food deserts, so keeping existing grocers open is even more critical there.
During the federal government shutdown at the end of last year, the longest in history, North Carolinians went without SNAP for about two weeks.
Smaller grocers experienced a drop in business during that time, Ellen said
“They saw a notable increase in shoplifting; store sales declined dramatically,” he said. “It was a short-term window, but it was a very good history lesson on what the impact of SNAP is for grocery stores and other retailers in the communities that they serve. Long-term would probably have been devastating for a lot of these stores.”
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