Fiscal Federalism 14: Federal Expenditures by State

Today the U.S. Census Bureau released the latest Consolidated Federal Funds Reports (CFFR) for Fiscal Year 2010. The CFFR is the most comprehensive analysis of federal spending by state available. A few weeks ago I blogged on Federal Aid to the States which is one of many components included in the CFFR.

Overall, the major moocher states off of Uncle Sam include Massachusetts, Connecticut, Virginia, Maryland, Kentucky, North Dakota and New Mexico with per capita federal spending topping over $12,000. On the flip side, the states that receive the least (ranging from $0 to $8,999 per person) from Uncle Sam include New Hampshire (Yes!), Texas (Gov. Perry anyone?), Illinois, Minnesota, Utah, Nevada, Oregon and California.

Check out the map below to see where your state falls on the moocher scale . . .

Chart Showing Per Capita Federal Expenditures by State for Fiscal Year 2010

Fiscal Federalism 13: The Impact of Federal Aid on Oklahoma

Free Money from Uncle Sam and Unintended Consequences in Oklahoma

Continuing on the theme about federal aid to the states, here is my latest article–“‘Free Money’ and Unintended Consequences”–in the Perspective magazine published by the good folks at the Oklahoma Council of Public Affairs.  Here is the money line:

There is no such thing as “free money” from Uncle Sam. Absent the recent run-up in federal grants to Oklahoma—which has spurred higher state spending—Oklahoma nearly would have been able to eliminate its individual income tax.

Fiscal Federalism 12: Federal Aid by Agency

In yesterday’s post on Federal Aid to the States, I asked if anyone knew why states such as New Hampshire and Texas received so much less federal aid, on a per capita basis, than their surrounding neighbors. Table 1 below reveals the answer.

To hunt down the culprit I decided to turn to my favorite two-state comparison–New Hampshire and Maine. One reason why I like to compare the two states, besides the fact they are economically and politically opposites, is that they have nearly identical populations right now. As such, I can show the dollar amounts without having to adjust them into per capita terms since the relative difference won’t change.

So let’s dive into the data. First, notice just how long the list is of federal agencies that dole out aid to the states.  If you are into pork, there is a federal agency out there for you. The obvious question from this list is . . . are there no limits to what the federal government can do?

Despite having identical populations, Maine receives $1.4 billion more from Uncle Sam than New Hampshire–$3.4 billion versus $2 billion, respectively. Where does this “Maine subsidy” come from? The vast majority of the difference is under the Department of Health and Human Services: Centers for Medicare and Medicaid Services to a tune of $1.1 billion.

So Medicaid is the single largest driver of the difference in Federal aid to the states accounting for $256 billion of the total $552 billion doled out. It dishes more aid than the Department of Agriculture ($31 billion), Department of Education ($45 billion), Department of Housing and Urban Development ($47 billion), Department of Labor ($10 billion) and Department of Transportation ($57 billion) COMBINED!

So the key to freeing your state from federal dependency, um, aid, is to control your state’s Medicaid program. Doing so will also reduce the “crowding out” of the private sector by the public sector which I’ve discussed previously– meaning a larger private sector will also result in greater economic prosperity.

Table of Federal Aid to State and Local Governments by Agency for Fiscal Year 2009

Fiscal Federalism 11: Federal Aid to the States

I’ve always found the phrase “Federal Aid to the States” to be rather demeaning to states–does Uncle Sam think the states need aid the same way international aid is given to basket-cases across the globe?  In most cases, this so-called “aid” is more about scoring political points than it is anything else, but I digress.

At any rate, the U.S. Census Bureau produces this series of reports–“Federal Aid to the States”–(pdf) that is a companion piece to the series of reports I’ve been discussing previously known as the “Consolidated Federal Funds Report.”  The FAS delves into more specific detail pertaining to the grants that Uncle Sam sends down to the states.

As part of a study I’m working on for the good folks at the Oklahoma Council of Public Affairs, I’ve been going through these reports.  What I have found will amaze you–or horrify you depending on your ideological persuasion.

The chart below comes from the most recent FAS report and it shows per capita federal grants to state and local governments by state.  The dark green indicates the states with the highest degree of federal aid while the light green indicates the states with the lowest degree of federal aid.

What I found interesting was that there are two low aid states that are stuck in a region of high aid states–New Hampshire in the Northeast and Texas in the south.  We all know that New Hampshire and Texas stand out for their small(er) government policies at the state level, but how does that translate into less federal aid?

Stay tuned for tomorrow’s post as I delve into specific grant programs that will help answer that question–as well as providing its own shocking data.  If you want to venture an guess, please weigh-in in the comment section.

Chart of Federal Aid to State and Local Governments Fiscal Year 2009