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These are the U.S. states most and least dependent on the federal government

Adriana Belmonte
Associate Editor

States that voted Democrat in 2016 generally rely less on federal funding than Republican states, according to a study by WalletHub .

The analysis looked at the return on taxes paid to the federal government, the share of federal jobs, and federal funding as a share of state revenue.

Thirteen out of the top 15 states found to be most dependent on the federal government voted for President Donald Trump in the 2016 presidential election. Ten out of the 15 least dependent states voted for Democratic nominee Hillary Clinton.

New Mexico is the most dependent state on the federal government, according to WalletHub. (Graphic: David Foster/Yahoo Finance)

‘No ranking like this is ever going to be perfect’

“Obviously, no ranking like this is ever going to be perfect,” Stan Veuger, an economist at the American Enterprise Institute, told Yahoo Finance. “Some things you can definitely say, like where the states that have the highest per capita income or pay the most in taxes.”

But “it’s not really true across the board,” Veuger said. “Virginia is a blue state and obviously has a lot of federal contractors and a lot of federal money … It obviously relies heavily on what the federal government does.”

According to WalletHub’s analysis, Virginia receives the second-highest amount of federal contracts while ranking federal funding as a share of state revenue. And given that WalletHub weighted federal funding four times more than share of federal jobs, Virginia is one of the least-dependent states on the federal government.

‘Poor states receive more federal funding through Medicaid’

WalletHub analyst Jill Gonzalez explained that “federal funding as a percentage of state revenue was calculated as states’ intergovernmental revenue from the federal government divided by the states’ general revenue.”

Intergovernmental revenue includes funding for Medicaid, Temporary Assistance for Needy Families (TANF), child welfare services, and other low-income assistance programs. For TANF , Kentucky (3rd overall), Alaska (7th overall), and Delaware use the most federal dollars.

“Because the federal income tax is progressive,” Veuger said, “I think you can also generally say that poor states receive more federal funding through Medicaid, which is a huge part of states’ budgets.”

The electoral map after the 2016 election. Stripes indicate that the state flipped from 2012. (Source: The New York Times)

In the 2017 fiscal year, Montana, the eighth-most dependent state overall in WalletHub’s analysis, received the highest amount of federal dollars for Medicaid at 80%. It was followed closely by West Virginia (4th overall), Arkansas, Kentucky (3rd overall), New Mexico (1st overall), and Arizona (6th overall).

In terms of gross domestic product (GDP) per capita, Massachusetts ranked first, followed by New York, Alaska, North Dakota, and Wyoming. On the other end of the spectrum, Mississippi is the lowest, followed by Arkansas, West Virginia, Idaho, and Alabama.

Veuger noted that “all the poor states are red. Mississippi and Louisiana get a lot of Medicaid money.”

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