These States Have Relied Most Heavily on Federal Aid

Mississippi is the state identified as the most reliant on federal aid in a new Tax Foundation analysis.

Mississippi is the state identified as the most reliant on federal aid in a new Tax Foundation analysis. Henryk Sadura / Shutterstock.com

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By Bill Lucia

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An analysis from the Tax Foundation presents federal aid as a percentage of state revenue for fiscal year 2013.

Mississippi, Louisiana and Tennessee are among the states identified as the most reliant upon federal aid in an analysis the Tax Foundation published Wednesday.

The analysis, however, is based on information that is a couple of years old—from fiscal year 2013. During that time period, the analysis found that 30 percent of U.S. state revenues came in the form of federal “grants-in-aid.” This money includes sources such as education funds, infrastructure programs, housing grants and Medicaid payments.

“Federal grants-in-aid to state and local governments have reached $600 billion per year, with Medicaid by far the largest (and most rapidly growing) component,” Jared Walczak, a policy analyst with the Center for State Tax Policy at the Tax Foundation noted in a blog post.

Federal aid is presented as a percentage of state general revenue in the analysis. Walczak points out that the analysis used a measure for general revenue that “includes state taxes and fees, but excludes utility revenue, liquor store revenue, and insurance trust revenue.”

The five states with the highest percentage of revenue from federal grants-in-aid in fiscal year 2013 included: Mississippi (42.9 percent), Louisiana (41.9 percent), Tennessee (39.5 percent), South Dakota (39.0 percent) and Missouri (38.2 percent).

(Tax Foundation)

Original data for the analysis came from the U.S. Census Bureau’s Survey of State and Local Government Finance. The Tax Foundation’s post about the analysis can be found here.

Bill Lucia is a Reporter with Government Executive’s Route Fifty.

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