Report: Alaska relies more on federal government than any other state

WalletHub ranked states based on return on taxes paid to the federal government, federal funding as a share of state revenue and share of federal jobs.
Image
Wilderness near Nome, Alaska
Wilderness near Nome, Alaska
(Erik Handeland/EyeEm/Getty)

Alaska is more dependent on the federal government than any other state in the U.S., according to a new report.

Personal finance website WalletHub ranked states based on how economically dependent they are on the federal government by comparing three key metrics: return on taxes paid to the federal government, federal funding as a share of state revenue and share of federal jobs.

Based on these criteria, Alaska landed at the top of the list for federal dependency.

"However, the oxymoron in this situation is that states with a higher level of federal dependence are likely better positioned to handle the coronavirus pandemic, given that a lot of relief has come from the federal government," according to the report.

The report found red states are overall more dependent on federal funding than blue states. It also indicated the least wealthy states usually get the most federal funding, pointing out a correlation between taxes collected and federal dependency. In general, lower taxes meant higher dependency.

For example, the sixth-most independent state in the report, Illinois, has the highest tax rates in the nation. Alaska has the lowest tax rates.

Alaska was among the states that received the highest amount of federal grants. It also was one of the states with the highest gross domestic product.

The states most dependent on federal funding, according to the report, were Mississippi, Kentucky, West Virginia and Montana. The least dependent states were Washington, Utah, Kansas, New Jersey and Delaware.