The state has received federal assistance for many reasons, from providing relief for natural disasters and health crisis to improving funding for education, transportation, infrastructure and healthcare. Some states receive much larger aid packages than others, but the dollar is not the only one that matters. It is important to contextualize the money that flows through it, such as the percentage of the state’s income that compensates for it, and how much the federal government will return taxes on state residents.
To know exactly how big federal dependence differences are for each state, personal finance firm (https://wallethub.com/wallethub) compared 50 states in terms of three key indicators. Federal funds as part of tax returns paid to the federal government, share of the federal government, and state revenue.
“Regardless of whether federal fund distribution is fair or not, it is beneficial for residents to live in one of the most federal-dependent states. Woletobu analyst Chiplepo said:
A closer look at the most federal reliance
Alaska
Alaska is the most federally dependent state, as more than 50% of the state’s revenue comes from federal funding. The reasons why Alaska wins many federal dollars include the difficulty of maintaining infrastructure in large states with harsh weather and a small population, as well as the wealth of Alaska’s natural resources, vulnerability to disasters, and its defensive importance.
Alaska also has many federal jobs. In fact, almost 5% of the state’s workforce is employed by the federal government. In the context, most states shares are between 1% and 3%.
Finally, Alaska offers a very good profit on the taxes residents pay to the federal government. For every dollar a resident pays in taxes, the state receives $2.36 in federal funds, and more than twice the investment.
Kentucky
Kentucky is a state that is largely dependent on the federal government because it receives a huge amount of federal funds compared to the taxes it pays by its residents. Kentucky earns $3.35 in federal funds for every dollar paid in taxes. About half of the other states have less than a dollar federal funding per tax.
Federal funds make up the majority of Kentucky’s revenues, at over 46%, the highest in the country. However, Kentucky doesn’t have as many federal jobs as other states. Approximately 1.8% of the state’s residents are employed by the federal government, and Kentucky is centrally located in the 50 states for that particular indicator.
West Virginia
West Virginia ranks third for federal dependence, with its residents earning $2.72 in federal funds for every dollar they pay in taxes.
Federal funds make up a large portion of West Virginia’s revenue, at over 45%, and over 3.7% of West Virginia’s workforce is employed by the federal government. Both of these rates are the highest in the country, demonstrating that West Virginia’s economy owe a lot to the federal government.
Florida came to number 26.
