10 States Most Dependent on the Federal Government

The U.S. Capitol in Washington D.C.

The U.S. Capitol in Washington D.C. | Win McNamee/Getty Images

Self-sufficiency is inherently an American ideal, and one that many people take great care to achieve, and pride in attaining. It isn’t easy though, and there are many factors at play. It’s not simply a calculation of who has the most money or best skill set — although that plays a part in it. Resources simply aren’t always distributed equally. And even if you look at which states themselves are the richest or poorest, you’re not getting a complete picture.

The true genius of America’s political organization lies partially within the way the states and the federal government form a cohesive bond. Essentially, the states themselves act as individual laboratories, all separate and able to take self-direction and action, yet all tied together under a unified central government.

Individuals in each city, county and state are free to elect their own representatives, whether to local governmental bodies or federal ones. In this way, we are all able to get a glimpse into how competing ideologies or methodologies for governance work for different groups of people in different situations, and cherry pick from a variety of different perspectives.

As a result, each state has a certain amount of natural competition with its counterparts. States compete with each other in order to attract businesses and investment dollars, for example, or to attract students to their universities. However, given the major demographic, economic, political, and geographical differences between different states, some carry unique burdens while others have unique advantages. Border states, for example, are much more concerned with immigration policies than central states are, and Gulf Coast states are much more concerned with the health and viability of the Gulf of Mexico than those located in the northeast, who may be more concerned about political tensions with Europe and Canada.

Because of differences like these, as well as differences in policy and fiscal decisions, states depend on support from the federal government to vastly different degrees. WalletHub recently released its annual study looking at federal dependency, and assumed the burden of digging into the data to find out definitively which states lean the most-heavily on Uncle Sam for support. The methodology is complex, so it’s recommended you click over and check out the release for yourself..

According to WalletHub’s research, here are the ten states that depend the most upon the federal government. And if you can’t wait, here’s a quick map as a preview:

Source: WalletHub

10. Missouri

Kansas City, Missouri

Kansas City, Missouri | Thinkstock

Missouri didn’t crack the top ten in 2015, but this year, the state edges in. Missouri is a state that seemingly has everything: large cities, rural areas, military bases, and federal land. There are a number of factors that are at play as to why Missouri has become so dependent on Washington, and as we saw with the Ferguson riots over the past year, many people are living out tough lives.

Missouri supplanted Maine this year (which dropped two spots) to make it into WalletHub’s top ten.

9. West Virginia

A coal mining and production facility in West Virginia

A coal mining and production facility in West Virginia | Jeff Swensen/Getty Images

West Virginia, located in the heart of Appalachia, which is one of the poorer regions in the country. Due to its relatively low population — totaling less than 2 million residents — there is not an incredible amount of tax dollars flowing to Washington D.C. from West Virginia to begin with.

As mentioned, West Virginia’s residents are also some of the country’s most impoverished. Many people earn low wages, work dangerous jobs, and are forced to handle a rather difficult socio-economic environment. For this reason, lots of aid in the form of government assistance is returned to West Virginia residents. The land is rough and the people are tough, but West Virginia does end up on the receiving end of more federal tax dollars than they put in.

8. Kentucky

A boy plays with toys at table in his Kentucky home

A boy plays with toys at table in his Kentucky home | Mario Tama/Getty Images

Kentucky residents have a tough go in terms of socio-economic conditions, particularly in the rural eastern part of the state. There are some large cities, like Lexington and Louisville, that have plenty of successful businesses and wealthy residents, but many of the state’s citizens still lag well-behind, as evidenced by the the leaps in the poverty rate over the past few years. That leads to high levels of government assistance to those in need.

Also of note, there are several military bases and installations in Kentucky that employ thousands, as well as portions of government-controlled land that require federal funding. Not to mention Fort Knox.

7. South Dakota

An old, isolated home stands in a South Dakota field

An old, isolated home stands in a South Dakota field – Scott Olson/Getty Images

South Dakota is home to some of the poorest counties in the nation. It also plays host to large amounts of Native American land, and some of the country’s most spectacular national parks and monuments. For a state with such a low population, those two factors alone can quickly skew the numbers. There is also a large military establishment near Rapid City, Ellsworth Air Force Base, which provides federal jobs to many servicemen and women.

These major factors — Indian reservations, national parks, and a military presence — coupled with a low population and tax base, play a big part in making South Dakota appear to be heavily-subsidized by the federal government.

6. Montana

The misty Rocky Mountains in Montana

The misty Rocky Mountains in Montana | Don Emmert/AFP/Getty Images

States out west get a rough shake from the federal government, as seen previously with Arizona. Montana is one of those states, but doesn’t have the advantage of a relatively high population or major cities that Arizona does. In fact, the state’s largest city is Billings, with a population of roughly 165,000.

Montana sits on the Canadian border, requiring federal funding to remain secure, and is also home to some of the country’s most incredible national parks, like Glacier National Park, and part of Yellowstone. There are huge amounts of federally-controlled land and a handful of considerably large Indian reservations that take in federal dollars.

5. Tennessee

Beale Street in Memphis, Tennessee

Beale Street in Memphis, Tennessee | iStock

Tennessee is a new-comer to the top ten this year. Like many of its neighboring states, Tennessee is rife with economic burdens. There are a few large cities and population centers — not to mention some large universities — but despite those large tax bases, the state still requires help from Washington. The state’s population has been hit hard by recent economic downturns, and as with other states in the Midwest and South, globalization has seen many jobs relocated.

4. Louisiana

Men fish on the Louisiana coast

Men fish on the Louisiana coast | Mario Villafuerte/Getty Images

Louisiana has been on a roller coaster ride, climbing from the number four spot to number eight on 2015’s list, and then this year, back to number four. States along the Gulf Coast are susceptible to many things others states don’t have to deal with. For example, Louisiana does provide the federal government with substantial tax revenues from the off-shore drilling industry, but is also in harm’s way when it comes to devastating natural disasters, like Hurricane Katrina. Many parts of the state have yet to recover, and lots of citizens were displaced as a result.

The state also has lots of infrastructure to maintain, as it is a rather complicated engineering feat to keep cities like New Orleans from ending up under water. There are also a lot of socio-economic issues that Louisiana has to deal with, as the state has the second-highest poverty rate in the country.

3. Alabama

People march on the Edmund Pettus Bridge in Selma, Alabama

People march on the Edmund Pettus Bridge in Selma, Alabama | Justin Sullivan/Getty Images

Another state located along the Gulf Coast, Alabama is one of the most poverty-stricken in the nation. The state is home to five military bases, and a major port city in Mobile. Alabama is also ranked highly in terms of it’s population of the economically-disadvantaged, with some reports pegging it as high as the sixth-poorest in the nation.

With so many people in lower income brackets, many people are not able to pay much — if any — in taxes, and tend to get substantial government assistance. Add in immigration and natural disaster issues, and it’s clear why Alabama needs some help from Washington.

2. New Mexico

A UAV is guided into a hangar

A UAV is guided into a hangar | Andrew Lee/U.S. Air Force via Getty Images

2. New Mexico

New Mexico was 2015’s most dependent state on the federal government, but that’s not without good reason. New Mexico shares a lot of the same issues that its neighbor Arizona does: it’s a border state — with a lot of immigration issues to tend to — and one that houses a lot of federally-controlled land.

There are also some major science and military installations that call New Mexico home, including the White Sands Test Facility and Los Alamos National Laboratory, both requiring substantial federal funding. Add on to that a handful of military installations as well. Large portions of the state are also designated as Indian reservations, placing an even greater amount of federal dollars in New Mexico’s jurisdiction.

1. Mississippi

Oil tankers move up a Mississippi River

Oil tankers move up a Mississippi River | Mario Tama/Getty Images

Along with its Gulf Coast neighbors, Mississippi is heavily-dependent on the federal government. Mississippi found itself in first place in 2014 as well, and fell to number two in 2015 — yet, is back in the top spot for 2016. Mississippi suffers from some serious socio-economic issues, including having the nation’s highest poverty rate, and one of the lowest income rates in the country.

These are problems that have plagued the state for a long time, and there doesn’t appear to be any hope for change in the near future. There are a few things that capture federal funding that add to the state’s total, including several military bases, but the major issue appears to be the lack of jobs and opportunity suffered by the state’s citizens. Natural and man-made disasters in the Gulf of Mexico haven’t helped either.

Finally, a recent “religious liberty” bill, if held up by the courts, is likely to further hurt the state’s economy, as boycotts seek to avoid investment.

Check out the entire WalletHub study for details about the rankings and methodology.

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