Texas is among the least federally dependent states, according to a new report.
A 2022 WalletHub study on the Most and Least Federally Dependent States ranked the states from highest to lowest dependency on the federal government. The Lone Star State came in at No.37 on the list, making it the 14th least federally dependent state.
“The upside of this is that the state is economically independent,” said Jill Gonzalez, an analyst with WalletHub. “On the downside, the states with a lower level of federal dependence were likely not that well-positioned to handle the coronavirus pandemic, given that a lot of relief has come from the federal government.”
Some of the factors that contributed to the rankings include the return on taxes paid to the federal government, the share of federal jobs, and federal funding as a share of state revenue.
Federal funding as a share of state revenue in Texas is 31.54%, meaning just under one-third of the state’s revenue came from federal dollars. In comparison, Louisiana has the highest federal funding as a share of state revenue at 44.77%, according to the data. Louisiana landed at No.8.
Gonzalez added that Texas is among the states that are least dependent on federal assistance because it generates sufficient revenue to sustain its investments.
“States that have lower federal funding may rely more on tax revenue for the local budget, which could translate into a higher level of taxation for residents,” she said. “The trade-off in being more federally dependent is relying more on federal government money for investments in education and infrastructure or things like food stamps or Medicaid.”
WalletHub also found that the state’s share of federal jobs is 1.78%, while Hawaii has the highest percentage of federal employment at 6.26%.
“There are simply fewer people who are federally employed compared to the total level of employment in the state,” Gonzalez told The Dallas Express. “The state registered a significant drop in federal jobs when the pandemic started, and this sector is still lagging in recovery.”
The WalletHub data suggests that primarily Democratic states tend to be less dependent on the federal government than predominantly Republican states. The average of red states’ ranks was 20.44, compared to an average rank of 30.56 for blue states.
However, she noted that the correlation does not apply to Texas.
“This has no impact on Texas, which is among the least federally dependent although it is a Republican state,” said Gonzalez. “Federal aid and grants are distributed to states based on need. The states that get more support tend to have poorer populations, lower tax revenues, and more assistance programs such as Medicaid.”
The top five most federally dependent states are Alaska, Mississippi, Kentucky, West Virginia, and Montana.
“The states that are more dependent on the federal government rely more on federal funding for investments and financial assistance,” she added. “This happens because these states are not able to financially sustain themselves solely with the revenue they generate at the state level.”