Welfare States: Federal Grants Now a Third of State Revenue

by Jillian Kay Melchior

Get your sticker shock via infographic: The Pew Center on the States has a great new illustration of how dependent states have become on federal dollars since the recession.

States now count on the federal government for $1 out of every $3 in revenue, according the 2010 Census, which offers the most recent finalized data. That’s your stimulus money at work.

And $1 out of every $3 is just the national average: In Arizona, 46.9 percent of state revenue came from federal grants; in Louisiana, 48 percent; and in Mississippi, a whopping 49.6 percent.

You don’t need a chart to realize this is unsustainable. The stimulus allowed states to maintain or increase irresponsible spending — even when the recession was raging — when they should have been cutting back.

Those cuts are even more painful now, after states have become artificially accustomed to more. Predictably, many have struggled to cut back as their federal dollars ran out. For states’ financial health, it looks like the stimulus could have done more long-term harm than short-term good.