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Idaho above average in federal dependency

by SHOLEH PATRICK
| March 24, 2022 1:00 AM

With such a high sentiment of anti-federalism of late, in March personal-finance website WalletHub released updated rankings for its 2022 Most & Least Federally Dependent States.

The report ranks the 50 states according to how economically dependent they are on federal dollars using three key metrics: return on taxes paid to the federal government, federal funding as a share of state revenue and share of federal jobs. Generally, the southern region (and Montana at fifth) dominate the top 10 most independent, or least federally dependent.

The least federally dependent is Delaware, preceded by New Jersey, Kansas, Utah, Washington, Illinois, Iowa, Massachusetts, Colorado and — here’s a surprise: California. Idaho ranked a little above average, at 20th.

Overall two trends were clear, and consistent with prior rankings:

  1. Federal dependency and state taxes are inversely related. With an average dependency rank of 20.44, Red States were more reliant on federal funding than Blue States, which rank 30.56 on average (the lower the rank, the more federally dependent).

This is at least partly explained by state tax rate. The least federally dependent states fund things more with state and local taxes. More federally dependent states get more dollars from the feds, so they can meet expenses with lower state taxes. For example, Illinois is the sixth least federally dependent, and has the highest state tax rates in the nation. At the other extreme is Alaska with the lowest state tax rates, but the most federally dependent.

  1. Higher GDP means less federal dependency. WalletHub found a 61.7% correlation between a state’s federal dependency and per-capita GDP; in other words, the least wealthy states tend to receive the most federal support.

Comparing Idaho (ranking 20 out of 50) and Washington (ranking 46th, or almost the least federally dependent), our state is getting almost double the return on its tax-day dollars. Idaho gets $1.69 back from the feds for every dollar we pay in taxes, whereas Washington nets a negative return, or 88 cents for each dollar. On the flip side, Washington has relatively more federal jobs (ours are both high with all this lovely national park land), with a 2.41% share in federal jobs compared to Idaho’s 1.83%.

As a percentage of state revenue Idaho’s share of federal funding is 32.76%. Washington’s is about 6% less.

See the full report at https://wallethub.com/edu/states-most-least-dependent-on-the-federal-government/2700.

Sholeh Patrick is a columnist for the Hagadone News Network. Email Sholeh@cdapress.com.