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While taxes make up the majority of each state’s general funding budget and are the most obvious source of state revenue, state governments also receive significant amounts of assistance from the federal government.

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New York-based financial technology company SmartAsset released the results of its third annual report States most dependent on the federal government study, putting the financial health of states into context by analyzing and ranking the 50 states according to their reliance on the federal government.

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To find the U.S. states that relied the most on the federal government in 2022, SmartAsset used the following metrics: federal share of state government revenue, ratio of federal funding to income taxes paid, percentage of workers employed by the federal government and the ratio of median earnings of federal workers to median earnings of private workers.

According to the study, federal funding accounts for about 39% of state revenue, highest in Wyoming (56.43%) and lowest in Hawaii (27.13%). Here are the top five (and bottom five) states most dependent on the federal government.

1. West Virginia

West Virginia is the most federally dependent state. Its federal share of state revenue is tenth at 45.16%, but its revenue from federal funding to income taxes paid is third highest with a ratio of 2.36 and 4.08 % of its workers are employed by the federal government. Its federal government employees earn nearly double (1.99) what workers in the for-profit private sector earn on average.

2. New Mexico

The Southern Rockies state of New Mexico is the second most federally dependent, largely due to its fifth highest percentage of federally employed workers, at 6.06%. It has a high federal share of state revenue (50.83%) and an average ratio of federal funding to income taxes paid (1.62).

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3. Mississippi

Mississippi receives 2.53 times more revenue from the federal government than its residents pay in income taxes, the second highest ratio in the study. Its federal share of state revenue is 47.31% and its percentage of workers employed by the federal government is above average at 3.23%.

4.Alabama

Yellowhammer State has the tenth highest percentage of workers employed by the federal government (3.33%) and the tenth highest ratio of federal funding to income taxes paid (1.25). 41.20% of its revenue comes from federal sources.

5.Alaska

Another state with a high percentage of federal government employees (6.83%), Alaska has an average ratio of federal funding to income taxes (1.62) but a high federal share of government revenue. State (50.83%).

According to data from SmartAsset, the state that depends on the federal government less is Connecticut (50). The southernmost state in the New England region has the third-lowest percentage of federal government workers (1.47%) and the fourth-lowest ratio of federal funding to income taxes paid (0.38). The other states that make up the bottom five states in their reliance on the federal government are New Jersey (49) Federal share of state revenue: 28.56%, ratio of federal funding to income taxes paid : 0.35, percent of workers employed by the federal government: 1.71%), Massachusetts (48; 33.28%, 0.41, 1.61%), Minnesota (47; 31.49%, 0 .58, 1.45%) and Wisconsin (46; 31.88%, 0.64, 1.33%).

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To find out how dependent your state is, you can view the full report here.

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About the Author

David Nadelle is a freelance editor and writer based in Ottawa, Canada. After working in the energy industry for 18 years, he decided to make a career change in 2016 and focus full-time on all aspects of writing. He recently completed a technical degree in communications and holds previous university degrees in journalism, sociology and criminology. David has covered a wide variety of financial and lifestyle topics for numerous publications and has experience writing for the retail industry.

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