Which States Rely the Most on Federal Aid?

A recent report from the Tax Foundation breaks down which states’ budgets benefit the most (and least) from federal aid.

States raise revenues through their own taxes, but the federal government is also adds to states’ general revenues. A recent ppi and Arizona. At the bottom were Hawaii, Virginia, and North Dakota.

The Tax Foundation said this about the attributes of states at each end of the spectrum:

As we have previously noted, these states [at the top of the list], and others that rely heavily on federal assistance, tend to have modest tax collections and a relatively large low-income population. Trends in these states [at the bottom of the list] are opposite those in federal aid-heavy states; they typically have higher tax revenues and a smaller low-income population. North Dakota is also able to export much of its tax burden, through severance taxes.

Virginia is also a state that benefits from its proximity to the nation’s capitol. Five of the ten wealthiest counties in America as reported by Forbes were within one hour of Washington, DC. That has led to some debate over whether some federal agencies should be moved out of Washington to be closer to the areas that they generally serve.

The graphic below shows the full breakout of how states rank in terms of their reliance on aid from the federal government.

US map showing a ranking of each state in terms of the percentage of federal aid that makes up its budget


About the Author

Ian Smith is one of the co-founders of FedSmith.com. He enjoys writing about current topics that affect the federal workforce.