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Arizona’s Rank As 10th Most Federally Dependent US State Is In Question

March 21, 2024

By Elizabeth Troutman |

Arizona ranked as the nation’s 10th most federally dependent state in 2024, according to personal finance website WalletHub

WalletHub compared the 50 states across three metrics: return on taxes paid to the federal government, federal funding as a share of state revenue, and share of federal jobs.

While Arizona’s overall rank was tenth, the Grand Canyon state ranked 15th for return on taxes paid to the federal government, fifth for federal funding as a share of state revenue, and 23rd for share of federal jobs. 

President of the Arizona Free Enterprise Club Scot Mussi took issue with WalletHub’s methodology.

“WalletHub doesn’t do a great job outlining their methodology, but from what I can gather they are basing ‘dependency’ on federal payouts, regardless of the purpose of the funds,” Mussi said. “For example, states with more military bases are likely punished as being more ‘dependent’ on federal funds. So to rectify the dependency problem should we equally spread out military bases among all 50 states so that every state receives equal funding? That makes no sense.”

Mussi said he wonders if Arizona has a higher dependency score due to the number of retirees from states like Illinois and California.

“Because people choose to come to Arizona, does that mean we are a “dependency” state?” Mussi asked. “Again, not a great metric to measure dependency.”

Blue states were found to be less financially dependent than red states. 

“Regardless of whether the distribution of federal funds is fair or not, living in one of the most federally dependent states can be beneficial for residents,”  WalletHub Analyst Cassandra Happe said in a news release. “For every dollar residents of the top states pay in taxes, they get several dollars back in federal funding, which often leads to higher-quality infrastructure, education, public health and more.” 

Alaska was found to be the most federally financially dependent state, followed by New Mexico, Kentucky, West Virginia, and Mississippi. New Jersey ranked as the least dependent. 

“Alaska is the most federally dependent state, with over 57% of the state’s revenue coming from federal funding,” Happe said.  “For every $1 that residents pay in taxes, the state receives $2.47 in federal funding. Plus, nearly 5% of Alaska’s workforce is employed by the federal government, one of the highest rates in the country.”

Vanderbilt professor Carolyn J. Heinrich said federal resources often support programs that increase societal benefits and reduce societal costs. 

“For example, Title I funds in education are distributed according to the level of family economic disadvantage, recognizing that it is important to ensure that all children are healthy and well-educated,” she said. “State resources may be prioritized for uses that yield benefits primarily within the state, such as economic development incentives.”

Mussi said he does think there are examples of states benefiting from their congressmen bringing home federal money for special interest and pork projects. 

“Senators from West Virginia have been notorious for this activity, and it should be opposed,” he said. “But metrics like state dependency don’t ever seem to accurately reflect this type of activity, so we usually never rely on them.”

Elizabeth Troutman is a reporter for AZ Free News. You can send her news tips using this link.

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