Arkansas has a slightly below-average reliance on federal aid, according to a recent study by the Tax Foundation.
From the Tax Foundation:
Though taxes are the most common and recognizable source of state government revenues, it’s important to remember that they’re not the only source. In fact, state governments received 31.5 percent of their total general revenues from transfers from the federal government in the 2012 fiscal year.
That number varies pretty widely for specific states, however. For example, Mississippi obtains 45.3 percent of its total state general revenues from the federal government (the largest share in the country). Also on the high end are Louisiana (44.0 percent), Tennessee (41.0 percent), South Dakota (40.8 percent), and Missouri (39.4 percent).
On the other end of the spectrum are those states who receive a much smaller share of general revenues from the federal government. The lowest federal share occurs in Alaska at 20.0 percent, followed by North Dakota (20.5 percent), Virginia (23.5 percent), Hawaii (23.5 percent), and Connecticut (23.6 percent).
According to this study, Arkansas gets 34.5 percent of its general revenue from the federal government, about 3 percent more than the national average.
The good news from the study is that, among our neighbors, Arkansas is tied with Texas for being the least reliant on federal aid.
The bad news is that this study uses data from fiscal year 2012, so it doesn’t include Arkansas’ recently-enacted “private option” Medicaid Expansion program, which is largely financed on the backs of federal taxpayers. Hilariously, this is what is called, in some legislative circles in the Capitol, “free money.” Arkansas and other states will face increased reliance on the federal government in future years, due to decisions to expand Medicaid.
However, according to the Cato Institute, the federal debt is expected to be $26.5 trillion in the next ten years, so it’s pretty clear that states should be trying to become less reliant on the federal government.
Medicaid expansions make states more reliant on the federal government at a time when they should be looking to become less reliant.