Study: Jersey Gets Short End of Fed Funding

WASHINGTON –– New Jersey finished last in a recent study that ranked states on the amount of federal funding they received compared to the amount of taxes they pay.
This state only gets 61 cents in funding for every dollar it pays in taxes, while New Mexico, which ranked first, received $2.03.
The federal government expenditures in New Jersey were $58.6 billion, but it collected around $96 billion in taxes. New Mexico, however, received $20 billion in funding and paid only $10 billion in taxes.
The study was done by the Tax Foundation, a nonpartisan tax research group based in Washington that tries to educate taxpayers about sound tax policy and the size of the tax burden borne by Americans at all levels of government.
The group used newly released Fiscal Year 2005 spending data from the Census Bureau’s annual Consolidated Federal Funds Report, which covers federal expenditures or obligations for the following categories: grants, salaries and wages, procurement contracts, direct payments for individuals, other direct payments, direct loans, guaranteed or insured loans, and insurance.
New Jersey’s $58.6 billion in federal funds broke down into $19.8 billion for retirement and disability, $15.2 billion for other direct payments, $11.1 billion in grants, $7.9 billion in procurements, and $4.4 billion in salaries and wages. Cape May County received $794 million of that total.
Other states that ranked poorly were Nevada, 65 cents; Connecticut, 69 cents; New Hampshire, 71 cents; and Minnesota, 72 cents, while additional big winners included Mississippi, $2.02; Alaska, $1.84; Louisiana, $1.78; and West Virginia, $1.76.
“All taxpayers know that the federal government uses tax and spending policy to redistribute income from citizens with high incomes to those who make little,” said study author Curtis Dubay, a Tax Foundation economist. “Citizens are less aware of geographically based income redistribution.”
Dubay continued, “High-income states cannot hope to receive back from the federal government more than they send in federal taxes because of the progressive nature of the federal income tax. Since the tax structure is unlikely to change, and federal spending is largely on auto-pilot, donor states are almost certain to keep sending more to Washington than they get in return.”
New Jersey is the second wealthiest state with a median household income of $64,470, according to the Census Bureau’s 2006 American Community Survey.
Other big losers in federal funding were rich states Connecticut and New Hampshire, which were also in the top five in household incomes.
Contact Hart at (609) 886-8600 Ext 35 or at: jhart@cmcherald.com
FY 2005 Rankings
New Mexico, $2.03
Mississippi, $2.02
Alaska, $1.84
Louisiana, $1.78
West Virginia, $1.76
North Dakota, $1.68
Alabama, $1.66
South Dakota, $1.53
Kentucky, $1.51
Virginia, $1.51
Montana, $1.47
Hawaii, $1.44
Maine, $1.41
Arkansas, $1.41
Oklahoma, $1.36
South Carolina, $1.35
Missouri, $1.32
Maryland, $1.30
Tennessee, $1.27
Idaho, $1.21
Arizona, $1.19
Kansas, $1.12
Wyoming, $1.11
Iowa, $1.10
Nebraska, $1.10
Vermont, $1.08
North Carolina, $1.08
Pennsylvania, $1.07
Utah, $1.07
Indiana, $1.05
Ohio, $1.05
Georgia, $1.01
Rhode Island, $1.00
Florida, $0.97
Texas, $0.94
Oregon, $0.93
Michigan, $0.92
Washington, $0.88
Wisconsin, $0.86
Massachusetts, $0.82
Colorado, $0.81
New York, $0.79
California, $0.78
Delaware, $0.77
Illinois, $0.75
Minnesota, $0.72
New Hampshire, $0.71
Connecticut, $0.69
Nevada, $0.65
New Jersey, $0.61