These states get up to half of their revenue from the federal government

USA Today

13-03-2025

These states get up to half of their revenue from the federal government
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Trump revokes spending freeze in face of legal challenges
STORY: The Trump administration on Wednesday appeared to abandon its proposed freeze on hundreds of billions of dollars in domestic aid, amid legal setbacks and widespread opposition. The White House budget office told federal agencies it was rescinding a memo that had ordered them to pause a wide swath of grant and loan payments. But officials said they still planned to block funding for
Four southern states rank in the top five nationally for their dependence on federal dollars, according to a new report.
And a very northern state, Alaska, is the most 'federally dependent' in the union, according to WalletHub. Southern states rank second through fifth: Kentucky, West Virginia, Mississippi and South Carolina.
WalletHub compiled the ranking 'just to point out that not all states are equal when it comes to federal funding,' said Chip Lupo, a writer and analyst at the personal finance site.
The report has currency in light of the Trump administration's recent efforts to freeze federal funding to programs that do not align with the Republican agenda. The freeze was announced in a January memo, subsequently rescinded. It is now the subject of an ongoing court battle.
Meanwhile, Congressional budget resolutions call for massive cuts in federal funding, potentially forcing states to make 'incredibly hard decisions' about Medicaid and other programs, according to a report from the left-leaning Center for Law and Social Policy.
Those predictions echo warnings from Democrats in Congress. Republicans contend that Medicaid and other state-level programs are safe.
Federal dollars fund up to half of state budgets
Federal dollars make up 18% to 50% of state budgets, depending on the state, according to data from the National Association of State Budget Officers. On average, about one-third of state dollars come from the federal government.
Millions of Americans in every state rely on federal funds, including 72 million Medicaid recipients, 30 million students eating subsidized meals, and 43 million food stamp recipients, according to a report from the left-leaning Center for American Progress.
States receive federal aid for many other purposes, from disaster relief to covering the costs of improvements in education, transportation and other infrastructure needs.
To measure each state's reliance on the federal government, WalletHub looked at three factors: How much of each state's revenue comes from the federal government; what share of the state's workforce is employed in federal jobs; and how much federal money the state receives for every dollar paid in federal taxes.
Many of the most federally dependent states, as it turns out, are relatively rural, sparsely populated and 'need federal funding for infrastructure,' Lupo said.
Some, like Alaska, have large tracts of federally owned land. Others, like South Carolina, have relatively large military populations.
Others have powerful, long-tenured representatives in Congress who have steered federal dollars to their constituents.
'Kentucky, for example: Mitch McConnell, he's an institution in Congress,' Lupo said of the long-serving Republican senator.
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The five most federally dependent states
Here are the five most federally dependent states, in order:
Alaska
More than half of Alaska's revenue comes from the federal government. One reason is the challenge of maintaining infrastructure in an enormous state with difficult weather and a small population. Other factors include the state's vulnerability to natural disasters, and its military value.
Nearly 5% of Alaska's workforce is employed by the federal government. In most other states, the share ranges from 1% to 3%.
Kentucky
Kentucky receives $3.35 in federal funds for every dollar Kentuckians pay in federal taxes. Federal funding makes up roughly 46% of Kentucky's revenue, one of the highest shares in the nation.
West Virginia
This state receives $2.72 in federal funds for every dollar residents pay in federal taxes. Federal funding makes up roughly 45% of West Virginia's revenue. About 3.7% of the state's workforce is employed by the federal government, one of the highest rates in the nation.
Mississippi
Federal funding makes up 45% of state revenue in Mississippi. The state reaps $2.34 in federal funds for every dollar paid in federal taxes.
South Carolina
South Carolina ranks first among states for the ratio of federal dollars it receives -- $3.42 -- per federal tax dollar collected.
In political terms, WalletHub found that red states are more federally dependent than blue states. The average Republican-leaning state ranks 21 among the 50 states, while the average Democrat-leaning state ranks 32.
Red States rely more on federal funds
New Jersey, a blue state, ranks as the least federally dependent state, WalletHub reports. Only 1.2% of state residents work in federal jobs, and federal dollars make up only 30% of state revenue.
California ranks second among states least dependent on federal funding. Federal funding makes up only 28% of state revenue, and only 1.4% of residents work for the federal government.
This story was updated to fix a typo.