• Democrats are outnumbered in Congress.
• Major policy debates among Democrats are instead unfolding in the states.
• From housing to school lunches, state Democrats are finding ways to advance their agenda.

Before President Donald Trump took office for his second term, Democrats in state legislatures across the country began preparing themselves for an onslaught of conservative-driven policies.

As the new year began, Democrats in the states filed a flurry of bills addressing everything from minimum wage increases and price fixing to child poverty and medical leave to stave off Trump's expected initiatives.

Despite the preparation, Democrats were still alarmed, however, when the administration last week sought to freeze billions in federal funding.

Here's how state Democrats are seeking to advance their priorities against the prospect of federal funding fights.

An eye on housing affordability

Trump's campaign success rested largely on the economy, rallying his base and even some longtime Democratic voters to the GOP over inflation.

The potential of a funding freeze, however, could threaten critical housing assistance programs that have aided many Americans. The president's new tariffs on imports from Canada, China, and Mexico could also raise the cost of materials for construction, causing house prices to go up.

So Democrats in the states are trying to pass a series of laws focused on housing affordability.

In Colorado, legislative Democrats are debating a bill that would regulate rent-setting computer algorithms, which many lawmakers said have allowed housing prices to be artificially increased and, in turn, have provided more favorable rent prices to landlords.

A report issued by the Biden administration in December found that renters in Denver paid $136 more each month to landlords who used the computer algorithms. (The report has since been taken down from the White House website.)

Similar efforts are underway in California, New Jersey, and Virginia, which all have Democratic-controlled legislatures.

In Wisconsin, legislative Democrats have also introduced a bill to broaden the homestead tax credit, which gives property tax relief to lower-income renters and homeowners.

Tackling child poverty

In 2021, congressional Democrats muscled through an expanded Child Tax Credit as part of then-President Joe Biden's American Rescue Plan — which directed monthly payments of $250 to $300 per child from July through December of that year.

However, an extension of the expanded Child Tax Credit failed to materialize due to opposition from then-Democratic Sen. Joe Manchin of West Virginia. And there was inaction on the issue at the federal level during the final two years of Biden's terms.

Among the uncertainty caused by January's funding freeze order, many eyes turned to the National School Lunch Program, a federal program that provides low-cost or free lunches to schoolchildren.

Democratic lawmakers in Alaska, Washington, New York, and Virginia are looking to pass legislation that would make school breakfasts and lunches free for all public K-12 students.

While there's no guarantee that the school lunch bills will pass in every state, Democrats are positioned to pass many of their highest-profile priorities in the states. And legislative Democrats are set to play a huge role in how the party navigates Trump's second term.

"The Trump administration is leading with chaos and confusion while prioritizing billionaires over working families," Democratic Legislative Campaign Committee President Heather Williams told Business Insider in a statement.

"As families scramble to navigate the dysfunction and make ends meet, state Democrats are picking up Washington's mess and bringing real solutions forward to bring prices down," she said. "From boosting rental assistance to eliminating the cost of school meals, Democrats are laser-focused and leading the fight against the callous economic devastation threatened by Trump and Republicans."