Editors' pick: Originally published Dec. 15.
It's a little known fact that American states are not allowed to declare bankruptcy. Unlike cities such as Detroit, by both law and the Constitution, no state may liquidate its debt. Instead, when the ledger gets too dire, they often have to sell off major assets and slash deeply into important programs.
Case in point, the recent Kansas cutbacks on areas such as education and Medicaid, enacted after Governor Sam Brownback's sweeping tax cuts failed to pay off.
This approach generates its own criticisms however. Finance and policy experts point out the long-term harm when a state sells off major assets, many of which the government will often have to purchase back or which have negative consequences for residents. (For example, the city of Chicago's budget-driven decision to lease out all public parking meters to a private firm, which led to spiraling costs for residents.)
The alternative is aid from the federal government. Unlike the European Union, the other major example of a federated economy, America comes with a built-in spender of last resort. Every state takes money from Washington to pay for programs on a variety of levels, but some depend on this spending more than others. Although currently states don't get direct debt relief, they receive enormous amounts of money for programs that range from social welfare to agricultural subsidies and education.
Some states need the help more than others. For many states with weak economies, or just those with high expenses, federal spending can make a huge difference not just in the statehouse spreadsheets but in real people's day-to-day lives.
While it's a common refrain the folks from red states howl the loudest about government spending while consuming the most of it, behind these slogans are real people who can eat, sleep and go to school with a little more security than they would have otherwise. Here are the 10 states that get the most dollars from Washington:
Percentage of State Budget From Federal Funds: 36%
Right off the bat Oregon is an outlier. Most states which depend heavily on federal money have weak or struggling economies, often coming from the bottom or near-bottom of median incomes. The Beaver State does not. It ranks 17th nationwide according to a report by the Kaiser Family Foundation, with the median household earning $60,834.
What's more, while the Pew Charitable Trusts has more than a third of the state's budget coming from federal funds in fiscal year 2014, this represents a startling reversal from past years.
According to The Oregonian, in 2013 Oregon was one of the states least dependent on federal dollars. "Overall," the paper reported, "the federal dollars flowing into Oregon… account for 15% of Oregon's Gross Domestic Product."
All in all, the state's place at No. 10 is an oddity.
Percentage of State Budget From Federal Funds: 36.6%
Maine makes a lot more sense.
With the 39th highest household incomes in the nation, and growth slow across both the state at large and the cities, it's not surprising that federal dollars make up a substantial portion of Maine's operating budget.
Percentage of State Budget From Federal Funds: 36.7%
Georgia has some things going for it. In Atlanta, it has one of the busiest and wealthiest cities in the United States, and as a result, the state has seen an influx of younger and wealthier people looking to make their livings there. It also has an unemployment rate of 4.9%, putting it right in the middle of the pack for the nation (ranked 29 by the Bureau of Labor Statistics).
However, it also has a weak per-household income, ranked just above Maine's at $50,768, and a recent history of economic troubles. The upshot is a state that draws the eighth highest percentage of its budget from Washington in the country.
#7. South Dakota
Percentage of State Budget From Federal Funds: 37.2%
South Dakota must have spent the past decade bitter about the day those northern Dakotans decided to split off. Thanks to an oil boom, North Dakota has been flush with cash for years, turning an improbable state into one of the hottest economic parties around.
Not so much in the south, where Mt. Rushmore and accommodating usury laws fuel much of the state economy.
That said, South Dakota still has much to be proud of with the lowest rate of unemployment in the nation and a labor force participation rate well above average. Those federal dollars are apparently being well spent.
Percentage of State Budget From Federal Funds: 38%
There's a certain oddity to the amount of money Missouri receives in federal funds. At No. 6, this is a state which pays a lot of bills with dollars from Washington, D.C. (or, at least, which receives a lot of money from federal programs). In fact, by 2013 Missouri received more than $1,600 per person in federal aid money.
At the same time, however, this is a state which is well known for its high-profile rejection of money from Uncle Sam. Whether it's attempting to defund Planned Parenthood or blocking Obamacare's Medicaid expansion, one of the things this state's government wants to be known for is its position on keeping federal dollars out of Missouri.
Except, of course, for 38% of the state budget.
Percentage of State Budget From Federal Funds: 38.5%
A million here and a million there, and pretty soon we're talking about real money. The same thing works with percentages … the numbers creep up and pretty soon we're almost at two-fifths of a state budget.
That's the place Kentucky is in, with a full 38.5% of revenue coming from federal dollars.
In this case, a lot of the explanation comes from household income. Kentucky has the second lowest in the nation, with the median household making only $42,387 per year. With little income to tax, the rest of the state budget has to come from somewhere, and numbers like that indicate a struggling state economy which will depend substantially on resources like Medicaid and safety net programs. The upshot is a No. 5 slot on this list.
Percentage of State Budget From Federal Funds: 39.1%
In 2015 Montana accepted Obamacare's Medicaid expansion, which goosed the amount of money the state takes in from Washington, D.C. Nevertheless, a lot of this state's budget comes from the federal government, and that has a lot to do with the local economy.
Incomes struggle in this heavily rural state, which derives much of its employment from tourism, mining and government work (industries which can often struggle). Yet, there's reason to think that the state is on the upswing. Unemployment is low and those household incomes have been growing for four of the last five years. Pretty soon, Montana might just find its way up and off lists like these.
Percentage of State Budget From Federal Funds: 39.9%
Tennessee doesn't make much money from its "other" categories.
This is one of the chief takeaways from Pew Charitable Trusts research, which broke per-state revenues down by taxes, federal funds, "service charges," miscellaneous and local funds. The Volunteer State takes in less money from those last three categories than most other states. The result is a budget that's heavily skewed federal, with federal revenue per capita at $1,666 per person in 2013.
Percentage of State Budget From Federal Funds: 40.1%
Louisiana should surprise no one.
This state has been hit hard and repeatedly over the past several years, from Hurricane Katrina and the BP oil spill to the recent floods that submerged many parts of the state and wiped out thousands of homes. The need for federal money is stark here, in a state which already struggled with one of the nation's highest rates of unemployment and lowest per-household incomes to begin with.
What Louisiana. and New Orleans in particular, have suffered in recent years is a perfect example of why America uses the federal system it does, allowing states to respond to crises that no one could handle alone.
Percentage of State Budget From Federal Funds: 40.9%
While far less harmed by natural and man-made disasters, Mississippi claims the largest share of federal money on this list. Washington dollars make up a near-plurality of this red state's dollars, driven largely by a weak economy.
Stuck with credit rating troubles Mississippi also struggles with the fifth highest rate of unemployment in the nation and the lowest per-capita household income. The result is a heavy reliance on federal money, which flows (among other things) in the form of social and educational aid programs to help many people in this state keep on their feet.