Which States Are the Most Dependent on Federal Aid?

by Barbara Hadden

Uncle Sam and taxes Sean Locke Photography / Shutterstock.com

Editor's Note: This story originally appeared on Commodity.com.

For many Americans, the federal government’s legislation packages to stimulate the economy during the COVID-19 pandemic are notable for the direct relief they have offered to individual households, such as stimulus checks and expanded unemployment benefits.

But these bills have also brought unprecedented levels of federal investment in state and local governments.

One of the major features of the $1.9 trillion American Rescue Plan, passed in March of this year, was a $350 billion fund for states, territories, cities, counties, and tribal governments across the nation to supplement their own revenues.

The package also included large pots of funding for areas like health, education, infrastructure, and others that are funded through state and local dollars. The American Rescue Plan followed the $2.2 trillion CARES Act from March 2020 and other pandemic relief packages that offered aid for similar purposes.

The aid provided to state and local governments in the COVID-19 stimulus bills was intended to ward off cutbacks to public services at a time when many observers feared that tax revenues would collapse as a result of the pandemic’s economic fallout.

To determine the states most dependent on federal aid, researchers at Commodity.com calculated federal funding as a share of total state and local government revenue using the most recent data available from the U.S. Census Bureau’s 2019 Annual Survey of State and Local Government Finances. In the event of a tie, the state with more federal funding per capita (per person) was ranked higher.

Here are the states most dependent on federal aid.

15. Indiana

Carmel, Indiana Golden Ratio Photos / Shutterstock.com

Federal funding as a share of total state revenue: 25.6%

Federal funding per capita: $2,359

Total federal funding: $15,931,783,000

Total state revenue: $62,345,742,000

14. Michigan

Detroit Michigan Linda Parton / Shutterstock.com

Federal funding as a share of total state revenue: 25.6%

Federal funding per capita: $2,425

Total federal funding: $24,171,800,000

Total state revenue: $94,423,525,000

13. Tennessee

Chattanooga, Tennessee Kevin Ruck / Shutterstock.com

Federal funding as a share of total state revenue: 25.7%

Federal funding per capita: $1,842

Total federal funding: $12,687,675,000

Total state revenue: $49,301,966,000

12. Vermont

Burlington, Vermont Erika J Mitchell / Shutterstock.com

Federal funding as a share of total state revenue: 27.2%

Federal funding per capita: $3,342

Total federal funding: $2,083,514,000

Total state revenue: $7,665,670,000

11. Wyoming

Riverton Wyoming Michele Vacchiano / Shutterstock.com

Federal funding as a share of total state revenue: 27.7%

Federal funding per capita: $4,163

Total federal funding: $2,423,952,000

Total state revenue: $8,765,832,000

10. Alabama

City scene from Mobile, Alabama Fotoluminate LLC / Shutterstock.com

Federal funding as a share of total state revenue: 27.9%

Federal funding per capita: $2,489

Total federal funding: $12,251,463,000

Total state revenue: $43,860,663,000

9. Arizona

Gilbert Arizona Cavan-Images / Shutterstock.com

Federal funding as a share of total state revenue: 29.7%

Federal funding per capita: $2,365

Total federal funding: $17,553,381,000

Total state revenue: $59,016,577,000

8. New Mexico

Santa Fe, New Mexico Sean Pavone / Shutterstock.com

Federal funding as a share of total state revenue: 30.2%

Federal funding per capita: $3,663

Total federal funding: $7,715,923,000

Total state revenue: $25,517,327,000

7. Arkansas

Little Rock, Arkansas Joseph Sohm / Shutterstock.com

Federal funding as a share of total state revenue: 30.3%

Federal funding per capita: $2,694

Total federal funding: $8,165,669,000

Total state revenue: $26,989,530,000

6. West Virginia

West Virginia Sean Pavone / Shutterstock.com

Federal funding as a share of total state revenue: 30.4%

Federal funding per capita: $2,966

Total federal funding: $5,292,991,000

Total state revenue: $17,438,498,000

5. Mississippi

Jackson, Mississippi Sean Pavone / Shutterstock.com

Federal funding as a share of total state revenue: 31.4%

Federal funding per capita: $2,941

Total federal funding: $8,726,251,000

Total state revenue: $27,796,883,000

4. Kentucky

Louisville, Kentucky Harold Stiver / Shutterstock.com

Federal funding as a share of total state revenue: 31.8%

Federal funding per capita: $2,854

Total federal funding: $12,780,283,000

Total state revenue: $40,238,628,000

3. Louisiana

Baton Rouge Louisiana CrackerClips Stock Media / Shutterstock.com

Federal funding as a share of total state revenue: 32.3%

Federal funding per capita: $3,146

Total federal funding: $14,616,011,000

Total state revenue: $45,271,357,000

2. Alaska

Anchorage, Alaska Rex Lisman / Shutterstock.com

Federal funding as a share of total state revenue: 32.7%

Federal funding per capita: $5,420

Total federal funding: $3,963,195,000

Total state revenue: $12,106,780,000

1. Montana

Montana town Nick Fox / Shutterstock.com

Federal funding as a share of total state revenue: 34.0%

Federal funding per capita: $3,219

Total federal funding: $3,477,855,000

Total state revenue: $10,222,926,000

Methodology

Man analyzing data on a laptop fizkes / Shutterstock.com

The data used in this analysis is from the U.S. Census Bureau’s Annual Survey of State and Local Government Finances and the U.S. Census Bureau’s American Community Survey 1-Year Estimates.

To determine the states most dependent on federal aid, researchers calculated federal funding as a share of total state and local general revenue using the most recent data available. In the event of a tie, the state with the greater federal funding per person was ranked higher.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

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