Uncle Sam Doles Out $3.4 Trillion to the States

By Sandy K. Johnson

Quiz: 1) Which state gets the largest proportion of its revenue from the federal government? 2) Which state gets the least?

Answers: 1) Louisiana at 42 percent and 2) North Dakota at 18 percent. On average, states receive almost a third of their total revenue from the feds, a concrete illustration of state reliance on the federal government.

All told, the federal government sends $3.4 trillion each year to the states. The feds bankroll entitlements such as Social Security and Medicare as well as supporting the military, federal employees and highway spending in the states.

“The national story is really a state story” because 92 percent of the federal budget flows out to the states, said Anne Stauffer, director of Pew Charitable Trusts’ fiscal federalism project.

Pew produces research and reports that help guide reporters through the complex federal-state relationship; topics covered include defense spending, entitlements, tax revenue and deductions, education and more. Pew data is sliced and diced by state.

Matt McKillop, researcher for Pew’s Fiscal 50 project, said state tax revenues have recovered in most states, after plummeting 13 percent collectively during the Great Recession. But there are still 18 states where tax revenue lags peak collections, forcing tough budget decisions.

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