Aug. 20, 2012 at 7:16 AM ET
In 2010, the federal government took the hundreds of billions of dollars it received in corporate, income and property taxes from each state and respent that money -- and then some -- on programs in each state. A review of federal data indicates that some states, considering their size and the taxes they paid, received a disproportionate amount of funding relative to the amount they put in each year.
The states that receive the most money from the federal government each year are, generally, the most populous ones. In 2010, eight of the 10 states with the highest population received the most. California, the most populous state in the country, receives the largest share -- more than a third of a trillion dollars. However, when accounting for population and the amount states pay in federal taxes, the breakdown looks very different.
The states that received the most money from the federal government were identified using the most recent data from the U.S. Census Bureau's Consolidated Federal Funds report, which breaks out how much the federal government spent on various programs, grants and public employee salaries by state. We relied on data from the Internal Revenue Service to calculate the amount that states pay in income tax to the federal government. Based on these reports, 24/7 Wall St. identified the 10 states that received the most money from the federal government, relative to how much they paid in income tax.
Some states, including Alaska and Virginia, received more than $15,000 per person from the federal government, even after subtracting the billions the state spent on income tax. This figure is nearly two-and-a-half times the amount received per person after taxes in states like Nevada, one of the poorest states in the country.
It would be expected that states that receive more money from the federal government are in greater need. However, most of the 10 states with the highest federal spending per capita had a higher median household income than the United States average. In fact, the first-, third-, fourth- and fifth-wealthiest by this measure all received the most money from the government. Because of their wealth, these states spent the most per capita in income tax, but it is negligible compared to the vast amounts they received.
A review of the data shows that some very large programs, including defense spending, Medicare and Medicaid, Social Security, and farm subsidies, had major effects on how much money each state received, to the extent that individuals get far more per person than in other states. In some cases, it was several programs that affected the total amount the government spent on the state per capita, but in others, it may have been just one program.
Often that program was defense spending. States like Virginia, Alaska, Maryland and New Mexico received the most money per capita in federal procurement spending, which includes things like Medicaid and NASA, but the majority of went to the Department of Defense. To give an idea of the amount of money the federal government poured into military bases and research centers in these states, the government spent approximately $7,300 per person on all programs in Nevada. It also spent approximately $5,000 per person on defense spending alone in Virginia.
Another program that requires a great deal of funding is the direct payments outside of retirement and disability. Within this category is Medicare. A couple of the states that received the most federal funds also received an extraordinarily large amount of money for medical prescription drug coverage under Medicare. More than 25 percent of all the funds that Connecticut received from the federal government were for drug benefits under Medicare.
Expenditures on Salaries and Wages is another category in which these states lead the country in spending per capita. This category includes the salaries and wages of defense workers and non-defense workers alike. All five of the top 10 states receiving the most in this category are represented on our list.
24/7 Wall St. identified the states that get the most money from the federal government by taking the figures for federal expenditures in each state from the 2010 Consolidated Federal Funds report and subtracting from it the income taxes retained, net of refunds, by the federal government for each state for the same year. The values obtained were then divided by state population figures for 2010 from the census bureau to arrive at a per capita figure for each state.
These are the states that get the most federal money.
No state in the U.S. received more money per person from the federal government than Alaska. One contributing factor is that the state had the second-highest figure for defense spending in 2010, at $7,337.59 per capita. The federal government also allocated a great deal toward wages and salaries in Alaska -- $5,709.52 per capita. This was more than any state other than Hawaii, which spent $5,805.78 per person, and twice the next-closest state within the contiguous U.S. -- Virginia -- at $2,638.68.
Virginia received more than $136 billion in federal funds in 2010. This state received more than 12 percent of the total Department of Defense procurement spending -- the second-highest proportion in the country, behind California. The state received the highest per capita procurement funding and the third-highest per capita federal expenditures for salaries and wages. The state’s proximity to the capital is a factor in the high government expenditures. Despite receiving the second-most federal funds per capita, Virginia was very low in terms of the grant funding it received.
Maryland had the fifth-highest federal spending per capita from the Defense Department -- the state has 11 military bases. In addition, the state received more spending per capita in nonmilitary programs than any other. The state’s proximity to the capital is likely a major factor in this. The state received more than 5 percent of the total U.S. procurement expenditure, and ranked second in per capita procurement spending -- $4,593.79 -- nearly three times the national average. Of the 50 states, Maryland has the second-lowest percentage of people living below the poverty line.
The Hawaiian Islands have 11 military bases, contributing to the country’s highest per capita federal expenditure from the Department of Defense in 2010. Along with a large number of military personnel on the government payroll, Hawaii also had the highest federal salaries and wages. Some 77 percent of the salaries and wages paid are for active military personnel. The state had the 10th highest federal procurement spending per capita, at $2,017.80. Since 2006, federal expenditure on salaries and wages in Hawaii has more than doubled.
5) New Mexico
New Mexico received the third-highest procurement spending per capita in the U.S. at $3,641.68. A significant component of this spending was under the category of non-defense agency spending for the Department of Energy. New Mexico received more federal funding from the Department of Energy than any other state, with an amount of $4.8 billion. This is due to the three nuclear weapons facilities located within the state. New Mexico also ranks seventh for the grant expenditures it received per capita. More than 60 percent of these grants were from the Department of Health and Human Services. Some 22.53 percent of the population was on Medicaid -- the fourth highest percentage in the nation -- which is funded through this department.