In this week's chart, Mercatus Center Senior Research Fellow Veronique de Rugy examines the states with the largest and smallest share of their economy fueled by the federal government. Data from the U.S. Census Bureau’s Consolidated Federal Funds Report for Fiscal Year 2010 shows that many state economies have grown increasingly reliant on federal government spending.
For instance, roughly one-third of Virginia’s economy relies upon the federal government. Among the top recipients of federal funding are states with a large defense industry presence; one-third of federal expenditures in Alaska, Virginia, and Hawaii is spent on defense. On the other hand, one-third of federal funding to Maryland and Connecticut is spent on health and human services.
The reliance of the private sector on federal funding is disconcerting, as it muddies the line between government and private enterprise.