This map from the Tax Foundation details various states' reliance upon federal aid. As one can see, there is quite a bit of variety across the United States on the levels of federal tax dollars each state receives. Why is that?
The highest federal aid recipients are: Mississippi (45.3%), Louisiana (44%), Tennessee (41%), South Dakota (40.8%), Missouri (39.4%), Montana (39%), and Georgia (37.9%).
As you may have noticed, almost all of these are “red” states controlled by the Republican Party (Missouri is an exception).
What gives? We have a couple of factors to look at here to get a clearer picture of what's going on. First, let's look at income tax levels by state - also from Tax Foundation 2012:
Two states are interesting in particular: North Dakota, and South Dakota. While N. Dakota only receives 20.5% of its revenue from federal aid, S. Dakota receives 40.8%.
How can that be? They appear very similar legislatively—both mostly Republican—they have very similar poverty rates, as noted by The Bismarck Tribune.
So, what is the reason behind the extraordinary difference in federal aid? The difference may lie in income taxes.
N. Dakota has an income tax while S. Dakota does not. According to The Argus Leader, in an article from May 2014:
“North Dakota ranks 49th with just 21 percent of its general revenue funds coming from federal dollars. That state benefits from oil revenues...It has an income tax. And the amount of state general fund dollars it spends each year is twice as much or more than South Dakota spends.”
Jason Dilgess, Gov. Daugaard's budget chief explains it rather frankly:
“The policy makers in our state have decided we want to keep taxes lower for our citizens...As a result, we try to get as much federal participation as we can.”
Variance in state tax revenue may make up a large portion of the seemingly odd differences in such similar states.
The next thing to look at is state budget levels. If the federal government sends out about the same amount of aid to each state per capita, then it will make up a bigger percentage of the state budgets that are lower.
Let's look at the top 20 states in total government spending per capita, which will tell us more precisely what's going on in each state (FY2013):
|3. West Virginia||$12,037|
|8. North Dakota||$7,896|
|10. Rhode Island||$7,481|
|13. New Mexico||$7,047|
|14. New York||$6,773|
Using the 2012 political map (prior to the fiscal year 2013), only 6 out of 20 states were “red states”: Wyoming, North Dakota, Wisconsin, Pennsylvania, Mississippi and Minnesota.
Of the top 10 spenders per capita, 7 were blue states: West Virginia, Delaware, Massachusetts, Hawaii, Vermont, Connecticut and Rhode Island. Alaska was split legislatively, leaving 2 red states in the top 10: Wyoming and North Dakota.
Next, looking at states by their budget solvency gives us an even clearer picture of what's going on, and if a state is spending beyond its means:
The Top 5 states were red or split states: Alaska, North Dakota, Wyoming, Wisconsin, and Utah.
And the bottom 6 states were: New Jersey, Maryland, West Virginia, Hawaii, Illinois and California - all solidly blue states.
In addition, the southern red states in the initial map of federal aid recipients are much more likely to have higher poverty rates. The impoverished, those who are more likely to need federal aid in a state, tend to vote Democratic according to Pew Research:
When it comes to choosing a party’s candidate in the voting booth, one pattern in modern American politics is so familiar it has become a truism: the rich vote Republican, the poor vote Democratic. And while the reality of the situation is much more nuanced, in broad strokes it has been the case that Republicans have consistently garnered disproportionate levels of support from the financially well-off, while the least financially secure Americans have been significantly more likely to back Democrats.
In other words, due in part to low voter turnout among the impoverished, it may not be that the majority of constituents who vote to turn a state “red” are the ones causing a state to have a higher level of federal aid in its state budget. Another way of putting this is that the majority of poor people who are reliant upon federal aid to make ends meet may not be voting majority Republican in a given state.
The point is: Don't simply judge a state by its cover. There are numerous complexities that underlie statistics, and these complexities must be explored in order to make informed opinions.
Editor's note: This article was updated after publication.