15 States Most Dependent on the Federal Government

The Lincoln Memorial and Washington Monument in Washington D.C

Some states inherently need more support from the federal government. | iStock.com/Sean Pavone

Americans strive to be self-sufficient. It’s an ideal 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 — though that plays a part. Resources simply aren’t always distributed equally. And even if you look at which states are the richest or poorest, you’re not getting a complete picture.

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

Residents 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 we can cherry pick from a variety of different perspectives.

As a result, each state has a certain amount of natural competition with its counterparts. For example, states compete with each other in order to attract businesses and investment dollars or to attract students to their universities. However, given the major demographic, economic, political, and geographical differences among states, some carry unique burdens while others have 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, which might be more concerned about political tensions with Europe and Canada.

Due to these differences, states depend on support from the federal government to vastly different degrees. WalletHub has released its annual study, looking at federal dependency and digging into data to find out which states lean the most on Uncle Sam for support. The methodology is complex.

Let’s take a quick look at the 15 states that rely most on the federal government.

15. Oregon

Oregon kicks off our list. As you’ll see as you work your way down the list, most of the states constituting the top 15 have several things in common. Notably, many of them are border states or have a large coastline. And several are in the western part of the country, where the federal government controls huge amounts of land. Both of those require significant federal spending, which explains Oregon’s appearance on our list.

The next state has a little of everything, including a heavy reliance on the government …

14. Missouri

Kansas City, Missouri; states in US

Kansas City, Missouri | Thinkstock

Missouri is a state that seemingly has everything: large cities, rural areas, military bases, and federal land. These are but a few of the factors that have made Missouri become so dependent on Washington. Certain areas, both rural and urban, have little economic opportunity for residents. The clash between rural and urban also makes Missouri one of the more interesting states to follow from a political standpoint.

13. South Dakota

Sioux Falls, South Dakota

Sioux Falls, South Dakota | iStock.com/shyflygirl

South Dakota is home to some of the poorest counties in the nation. It also contains large amounts of Native American land and a handful of 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, South Dakota — Ellsworth Air Force Base — which provides federal jobs to many servicemen and women. These factors, along with a low population and tax base, play a big part in making South Dakota appear to be heavily subsidized by the federal government.

12. Louisiana

Dusk falls over Bourbon Street in the French Quarter of New Orleans, 11 July 2006, almost one year after Hurricane Katrina devastated the city. For tourists strolling through the French Quarter it's easy to forget that Hurricane Katrina ravaged New Orleans a year ago. The beignets are fresh, trinkets and designer clothes are artfully arranged in shop windows, and hurricanes are spinning in the bars on Bourbon Street. But while the music, food and good times have come back, the crowds have not and the city is struggling to make ends meet while its main industry remains crippled. With more than 10 million visitors a year, tourism was once a 5.5 billion dollar industry in New Orleans, accounting for 40 percent of the city's tax revenues and employing 85,000 people. (Photo by Robyn Beck/AFP/Getty Images)

New Orleans | Robyn Beck/AFP/Getty Images

States along the Gulf Coast are susceptible to many things others don’t have to deal with. For example, Louisiana provides the federal government with substantial tax revenue from the offshore-drilling industry. But it’s also susceptible to disasters, such as Hurricane Katrina. Plus, the state has a lot of infrastructure to maintain. On top of that, Louisiana has the third-highest poverty rate in the country.

11. Arizona

View of Phoenix Arizona

Arizona | iStock.com

We mentioned western states have large amounts of federal land. Arizona is no exception. It’s home to national parks, such as the Grand Canyon, and a large chunk of our border with Mexico. Those require a lot of federal backing. It’s also home to many Native American reservations, including the nation’s largest: the Navajo Nation.

10. Indiana

Indianapolis skyline at sunset

Indianapolis skyline at sunset | iStock.com/RudyBalasko

Like many other Midwest states, Indiana has experienced a tough go of it economically in recent years. It’s a part of the Rust Belt, and many of the state’s jobs have been outsourced or replaced with automation. The manufacturing jobs that supported many communities are simply gone. The tax base has shrunk as a result, and opportunities have dried up.

The next state is surprisingly found in New England …

9. Maine

Lubec, Maine is seen from the water.

Lubec, Maine | Don Emmert/AFP/Getty Images

Maine is yet another border state in a unique geographic area. The border with Canada requires lots of spending to maintain, and Maine’s numerous waterways, ports, and islands also require infrastructure spending. Maine doesn’t have a huge population either, meaning its tax base is relatively small. And a small tax base plus infrastructure challenges, among other things, add up to increased federal spending.

8. Tennessee

Beale Street in Memphis, Tennessee

Beale Street in Memphis, Tennessee | iStock.com

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. Recent economic downturns hit the state hard. And as with other states in the Midwest and South, globalization has seen many jobs evaporate or relocate.

7. Montana

grassy hill in Missoula, Montana

Missoula, Montana | iStock.com/Andy Kemmis

Western states get a tough shake from the federal government. Montana is one of those states, but it doesn’t have the advantages of a relatively high population or major cities that some others do. In fact, the state’s largest city is Billings, Montana, with a population of a little more than 100,000.

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

6. South Carolina

Captiol building in Columbia, South Carolina

Columbia, South Carolina | iStock.com/Sean Pavone

South Carolina suffers from many of the same issues as other states on this list. Particularly, it has a sizable coastline, some economic struggles, and a few military bases. And, like other states with the same factors, these require help from the federal government. Also, like many other states, the economic situation isn’t great. Things have improved since the Great Recession, but the growth rate still isn’t where policymakers would like it to be.

5. West Virginia

view of the city, mountains, and water in Charleston, West Virginia

Charleston, West Virginia | Joe Raedle/Getty Images

Due to its relatively low population of fewer than 2 million residents, there is not an incredible amount of tax dollars flowing to Washington, D.C., from West Virginia. For that reason, West Virginia gets more back than it puts in. Many people work in dangerous, low-wage jobs (mining, for example), and the state’s economy has been slow to adapt. Politicians have made a point to promise help to West Virginians, but it’s been slow coming.

4. Alabama

scene of downtown Huntsville, Alabama

Huntsville, Alabama | iStock.com

Alabama is one of the most poverty-stricken states in the nation. It’s home to five military bases and a major port in Mobile, Alabama. It’s also ranked high in terms of its population of the economically disadvantaged, with some reports pegging it as high as the fourth-poorest in the nation. With so many people in lower income brackets, many are not able to pay much — if any — in taxes and tend to get government assistance. You can also add in immigration and environmental issues that have substantial costs.

3. New Mexico

A street sign in Santa Fe, New Mexico

Santa Fe, New Mexico | iStock.com

New Mexico was 2015’s most dependent state on the federal government. Two years later, it has dropped a couple of spots. New Mexico shares a lot of the same issues with its neighbor Arizona. Specifically, it’s a border state with immigration issues, and it houses federal lands.

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 to that a handful of military installations, as well. Large portions of the state are also designated as Native American reservations, placing an even greater amount of federal dollars in New Mexico’s jurisdiction.

2. Mississippi

aireal view of Jackson, Mississippi

Jackson, Mississippi | iStock.com/Sean Pavone

Along with its Gulf Coast neighbors, Mississippi is heavily dependent on the federal government. The state suffers from some serious socioeconomic issues. There are a few things that capture federal funding, including several military bases. But the major issue appears to be the lack of jobs and opportunity suffered by the state’s residents.

1. Kentucky

A worker harvests tobacco in Kentucky.

A worker harvests tobacco in Kentucky. | Luke Sharrett/Getty Images

Kentucky’s economy has had it rough. There are some large cities, such as Lexington and Louisville, offering plenty of opportunities. But many of the state’s residents still lag behind, and the state has a high poverty rate. 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.

More from Money & Career Cheat Sheet:

More Articles About:   , , , ,