A new study by a nonprofit called State Budget Solutions shows Georgia as having the second highest percentage point increase between 2001 through 2012 in the amount of revenue being funded by federal dollars. In 2001, 29.09% of state revenue came from the federal government, while in 2012, it was 38.06%, a difference of 8.97%. Only Louisiana had a higher percentage increase of 12.54%.
The average over the period had 35.48% of state revenue coming from the federal government. That’s enough to put the Peach State at 14th when compared to the other 49 states. Mississippi, Wyoming and South Carolina had the highest percentage of federal dollars, while Nevada, Virginia and Delaware had the lowest.
The Washington Examiner takes this a bit further, showing that on a per-capita basis, federal revenue went from $878 in 2001 to $1,424 in 2012.
Georgia’s state government receives less federal money per capita than 43 other state governments, but it’s rapidly losing its budget autonomy.
Federal dollars made up up 38 percent of the Peach State’s budget in 2012, up from 29 percent in 2001. The state received $5.6 billion for public welfare programs and $2.9 billion for education in 2012, along with $1.2 billion for highways.
The Republican Governors Association rightly notes Governor Deal’s leadership in keeping state taxes low and promoting economic growth. If voters approve a constitutional amendment in November, the state will be prevented from raising income taxes.
By keeping state taxes low, the amount of federal funding of the state’s budget is likely to increase, and that poses risks. As the State Budget Solutions study states,
Growing reliance on federal funding in state budgets is a dangerous trend. It threatens the financial stability of all 50 states, as well as the federal government. As federal debt skyrockets, Congress must look for ways to reduce spending. In the many states that count on the federal government for over one-third of their general revenue, every congressional spending reduction proposal puts the state at risk of a serious financial shortfall.
States must recognize that this funding arrangement also harms fiscal federalism. Federal funding usually comes with strings attached, and that means less chance for local control. When states cannot stand firmly on their own financial footing, they will lose the ability to make the best, locally-based, independent decisions for their residents.
Would you be willing to trade an increase in state tax revenue for a reduction in federal funding of state operations?