These Are The States Most Dependent On Federal Aid
What states are the most dependent on federal aid? For many Americans, the federal government’s packages to stimulate the economy during the COVID-19 pandemic are notable for the direct relief they have offered to individual households, like stimulus checks and expanded unemployment benefits. But these bills have also brought unprecedented levels of federal investment into state and local governments.
Included in the $1.9 trillion American Rescue Plan 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 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.
For most of the last two decades, federal funding has represented more than 20% of all state and local government revenue according to data from the U.S. Census Bureau.
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. Commodity used the 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 person was ranked higher. Because federal funding is structured in this way, some states are more heavily dependent on federal dollars than others.
Pre-pandemic, eight states took in more than 30% of their revenues from federal dollars. Southern states like Louisiana, Kentucky, and Mississippi are among the most dependent on federal funding. These states have some of the largest numbers of people living in poverty and qualifying for various federal aid programs. Additionally, some rural states with small populations, like Montana and Alaska, have a limited tax base that makes federal support more important to their budgets.
Here are the states most dependent on federal aid:
For more information, a detailed methodology, and complete results, you can find the original report on Commodity.com’s website: https://commodity.com/blog/federal-aid-states/
