Grants to States

State government dependence on federal funding growing at alarming rate

The Washington Examiner | by David Freddoso | April 15, 2014

Only 11 states depended on the federal government for more than one-third of their total revenues in 2001. By 2012, 24 states found themselves in this situation.

State-by-state data from the U.S. Census Bureau, compiled by the State Budget Solutions nonprofit, illustrates the trend of increasing state dependence on federal financial assistance.

Forty-one of the 50 states have become more dependent on the federal government since 2001 - with federal dollars accounting for an increasing share of their total revenues.

This trend of increased state dependency on Washington reduces state and local control, while threatening the states' long-run autonomy.

The reason is that with federal patronage comes federal leverage. The original Obamacare plan, for example, was to force states to expand Medicaid by threatening them with loss of all federal matching Medicaid funds if they refused.
Although that particular scheme was struck down by the Supreme Court, state governments hate to turn down revenue, and federal dollars have strings attached that force states either to operate as Washington prefers or lose the money.

This problem is exacerbated by the federal government's control of the currency and ability to borrow virtually unlimited amounts of money.

No state can print money, and most states must balance their annual or biennial budgets. States that depend on federal funds are also vulnerable when Washington cuts programs.

Below is a look at the five states whose financial dependency on Washington grew the most between 2001 and 2012.

Keep in mind that this is not merely a measure of federal dollars spent in any particular state, but rather a look at the share of federal money making up a state's overall budget, and how fast that share has grown since 2001.

The federal money that goes to states -- known officially as "intra-governmental revenue" -- includes everything from one-time stimulus and disaster grants to highway funds and federal contributions to state-run welfare programs.

Also note that some states with lower taxes and smaller governments will appear to be more dependent because federally funded programs necessarily comprise bigger portions of their budgets.

5. Idaho (29 percent more dependent since 2001): The Gem State still receives less from the feds per resident than the average state government ($1,582). It also has hundreds of miles of highways despite its small population.

Even so, Idaho relied on the feds for only 27 percent of its budget in 2001, whereas that number was 35 percent in 2012, down from a stimulus-era high of 40 percent in 2010.

Idaho welfare programs consumed the most federal dollars in 2012 at $1.2 billion, followed by education and highways.

4. New Mexico (31 percent more dependent): New Mexico's state government is rapidly rising and near the top in terms of federal dollars received per capita ($2,511 in 2012, up from $1,341 in 2001).

Thirty-seven percent of its 2012 budget came from Uncle Sam, up from 28 percent at the turn of the century.

3. Georgia (31 percent more dependent): Georgia's state government receives less federal money per capita than 43 other state governments, but it's rapidly losing its budget autonomy.

Federal dollars made up 38 percent of the Peach State's budget in 2012, up from 29 percent in 2001. The state received $5.6 billion for public welfare programs and $2.9 billion for education in 2012, along with $1.2 billion for highways.

2. Massachusetts (38 percent more dependent): In per capita terms, Massachusetts once took less federal money than most state governments did.

Its modern low point came in 2003, when the Bay State accepted only $795 per resident. It has since leapt into the top 20, increasing its federal contribution (to $1,973 per person) and the federal share of its state budget from 21 percent in 2001 to 29 percent in 2012.

Much of the increase began with stimulus funding after the 2008 crash, and the federal money flow has continued ever since.

In 2012, 29 percent of Massachusetts' state budget came from the feds, with $7.5 billion for welfare, $1.7 billion for education, and $1 billion for housing and community development.

1. Louisiana (40 percent more dependent): The Pelican State's dependence on Uncle Sam rose dramatically in the two years after Hurricane Katrina, and then still further with the stimulus package, reaching a peak in 2010, when 48 percent of state revenues came from Washington. That number has only started to come back down in the last two years.

In 2001, Louisiana's state government received less than $1,200 in federal money per resident, accounting for 31 percent of its revenues.

Today, it gets $2,400 per resident, which comes to or 44 percent of its state budget. Louisiana rose in the ranks last decade to become the second-most dependent state (after Mississippi) in terms of the share of their budget that comes from D.C.

Most of the money ($5.4 billion) goes to welfare programs, including Medicaid, and education ($1.5 billion), with an additional $1 billion going to highways. http://www.statebudgetsolutions.org/publications/detail/state-government-dependence-on-federal-funding-growing-at-alarming-rate

Comments

If you add Social Security, Medicare and other direct payments to Georgia citizens, Georgia receives $91 billion. https://www.nationalpriorities.org/smart/georgia/

Most of this funding is for Georgia to “administer” federal programs. The $1.2 billion for transportation is the federal gasoline tax collected in Georgia.  We should close the federal DOT and keep the federal gasoline tax.  The $2.9 billion for Education can be reduced from the added cost of these federal programs. Most of this is for worthless research grants.  The $5.6 billion in welfare payments are federal programs they have the states administer.

All of this is printed and borrowed money the federal government doesn’t have. We need to wean ourselves away from these federal dollars that aren’t really there. These are bribes to make states more dependent on federal grants.  If we as states don’t assert our sovereignty, it will be lost.

Norb Leahy, Dunwoody GA Tea Party Leader