Federal assistance to states came into the spotlight during the coronavirus pandemic, when some states received far more money per case than others from the stimulus packages. However, Americans have looked at federal assistance programs with growing scrutiny for years, and the number of people dependent on government assistance was decreasing prior to the coronavirus crisis. Regardless of overall trends, though, it is clear that some states receive a far higher return on their federal income-tax contributions than others.
In order to find out exactly how big the difference in federal dependence is from state to state, WalletHub compared the 50 states in terms of three key metrics.
Main Findings
Most Federally Dependent States
| Rank | State | Total Score | State Residents’ Dependency | State Government’s Dependency |
|---|---|---|---|---|
| 1 | Alaska | 93.22 | 1 | 3 |
| 2 | Mississippi | 84.94 | 4 | 4 |
| 3 | Kentucky | 79.54 | 6 | 7 |
| 4 | West Virginia | 78.08 | 2 | 11 |
| 5 | Montana | 75.90 | 13 | 2 |
| 6 | New Mexico | 75.15 | 3 | 15 |
| 7 | Arizona | 69.92 | 12 | 6 |
| 8 | Louisiana | 69.50 | 21 | 1 |
| 9 | Indiana | 68.23 | 9 | 12 |
| 10 | Alabama | 66.92 | 10 | 10 |
| 11 | South Carolina | 62.94 | 7 | 25 |
| 12 | Wyoming | 60.36 | 25 | 5 |
| 13 | Maine | 57.50 | 11 | 19 |
| 14 | Tennessee | 52.74 | 26 | 8 |
| 15 | Missouri | 47.43 | 32 | 9 |
| 16 | Pennsylvania | 47.21 | 20 | 18 |
| 17 | Oklahoma | 46.45 | 15 | 32 |
| 18 | Vermont | 45.76 | 16 | 30 |
| 19 | South Dakota | 45.65 | 24 | 17 |
| 20 | Idaho | 44.48 | 22 | 22 |
| 21 | Maryland | 41.72 | 19 | 33 |
| 22 | Michigan | 41.45 | 28 | 21 |
| 23 | North Dakota | 41.32 | 5 | 49 |
| 24 | Arkansas | 40.20 | 41 | 14 |
| 25 | Oregon | 39.30 | 27 | 27 |
| 26 | Hawaii | 38.00 | 8 | 50 |
| 27 | New York | 37.72 | 45 | 13 |
| 28 | Georgia | 37.61 | 35 | 20 |
| 29 | North Carolina | 36.99 | 34 | 23 |
| 30 | Rhode Island | 36.52 | 33 | 24 |
| 31 | Connecticut | 35.91 | 18 | 39 |
| 32 | Wisconsin | 35.74 | 17 | 40 |
| 33 | Nevada | 35.37 | 29 | 31 |
| 34 | Florida | 35.00 | 30 | 29 |
| 35 | Ohio | 34.20 | 46 | 16 |
| 36 | New Hampshire | 33.91 | 39 | 26 |
| 37 | Texas | 33.69 | 38 | 28 |
| 38 | Minnesota | 28.99 | 23 | 43 |
| 39 | Virginia | 28.48 | 14 | 48 |
| 40 | Nebraska | 28.19 | 42 | 34 |
| 41 | California | 26.87 | 44 | 35 |
| 42 | Colorado | 26.34 | 40 | 36 |
| 43 | Massachusetts | 21.19 | 48 | 37 |
| 44 | Iowa | 20.96 | 31 | 45 |
| 45 | Illinois | 20.60 | 47 | 38 |
| 46 | Washington | 19.91 | 43 | 41 |
| 47 | Utah | 15.46 | 36 | 46 |
| 48 | Kansas | 13.50 | 37 | 47 |
| 49 | New Jersey | 13.16 | 49 | 44 |
| 50 | Delaware | 12.26 | 50 | 42 |
Notes: *No. 1 = Most Dependent
With the exception of “Total Score,” all of the columns in the table above depict the relative rank of that state, where a rank of 1 represents the most dependent for that metric category.
Blue vs. Red States
Correlation Analysis
Ask The Experts
For further clarity on the problems contributing to federal-funding disparities, we talked to a panel of economics and public policy experts. Click on the experts’ profiles to read their bios and responses to the following key questions:
- Should federal resources be allocated to states according to how much they pay in federal taxes or should some states subsidize others?
- What programs should be a state/local responsibility and what should be a federal responsibility?
- What is the fairest way to redistribute federal resources back to the states?
- What more can the current administration do to help reduce the impact of revenue shortfall in state budgets during this economic downturn?
Ask the Experts
Ph.D. – Associate Professor, School of Planning, Public Policy and Management; Co-Director, Institute for Policy Research and Engagement; Associate Faculty, Knight Campus for Accelerating Scientific Impact – University of Oregon
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Ph.D. – Professor Emeritus, Department of Economics, Hunter College, CUNY
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Chair & Professor of Economics – Suffolk University
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MPP, Ph.D. – Associate Dean of Graduate Studies; Professor of Political Science, Public Policy and Urban Affairs, Office of the Dean, College of Social Sciences and Humanities – Northeastern University
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Ph.D. – Professor, Department of Agribusiness and Applied Economics; Director, Center for Public Choice and Private Enterprise – North Dakota State University
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Methodology
In order to determine the most and least federally dependent states, WalletHub compared the 50 states across two key dimensions, “State Residents’ Dependency” and “State Government’s Dependency.”
We evaluated those dimensions using three relevant metrics, which are listed below with their corresponding weights. Each metric was graded on a 100-point scale, with a score of 100 representing the highest level of federal dependency.
We then determined each state’s weighted average across all metrics to calculate its overall score and used the resulting scores to rank-order the states.
State Residents’ Dependency – Total Points: 50
- Return on Taxes Paid to the Federal Government: Triple Weight (~37.50 Points)
Note: This metric was calculated by dividing federal funding in U.S. dollars by IRS collections in U.S. dollars. - Share of Federal Jobs: Full Weight (~12.50 Points)
State Government’s Dependency – Total Points: 50
- Federal Funding as a Share of State Revenue: Full Weight (~50.00 Points)
Note: This metric reflects the proportion of state revenue that comes from the federal government in the form of intergovernmental aid in 2019.
The following metrics were included in the infographic above for context only. They represent subsets of federal funding and are reflected in the first two metrics.
- “Federal Contracts” divided by “IRS Collections”
- “Grants” divided by “IRS Collections”
- “Other Financial Assistance” divided by “IRS Collections”
Sources: Data used to create this ranking were collected from the Internal Revenue Service, U.S. Census Bureau, USAspending.gov and Bureau of Labor Statistics. Unless noted otherwise, the statistics underlying this report are from 2020 and 2021.
