According to the Consolidated Federal Funds Report (pdf) from which this data is drawn from, “grants to state and local government” constitute federal dollars that are provided to other jurisdictions. This category is dominated by Medicaid which consists of federally-matched dollars tied to state spending. Another major component are grants for infrastructure spending.
The table below shows the wide range of federal “grants to state and local government” dependency by state. The states that are most dependent are: Alaska (9.7 percent), Wyoming (9.2 percent), New Mexico (8.8 percent), Vermont (8.7 percent) and Mississippi (7.9 percent)
On the other hand, the states that are least dependent are: Virginia (2.8 percent), Nevada (3.1 percent), Florida (3.1 percent), Colorado (3.3 percent) and New Hampshire (3.6 percent–Woo Hoo!)