Tax Foundation: Montana 6th Most Reliant State on Federal Dollars

A new report out from the Tax Foundation has found that Montana is the 6th most reliant state on federal dollars, depending on federal money for 39 percent of state spending in 2012.

Only five states — Mississippi, Louisiana, Tennessee, South Dakota, and Missouri — counted on the federal government for a higher percentage of state spending than Montana. The five states least reliant on federal dollars were Alaska, North Dakota, Virginia, Hawaii, and Connecticut.

Graphic from the Tax Foundation
Graphic by the Tax Foundation

The report comes amid growing concern about the state’s over-reliance on federal dollars. Media Trackers reported last month that an analysis of Democratic Gov. Steve Bullock’s budget proposal from the non-partisan Legislative Fiscal Division (LFD) found that Bullock’s proposal relies on federal dollars for 42 percent ($4.155 billion) of its spending total ($9.802 billion) in the primary appropriations bill.

Those who want to reduce dependence on federal dollars worry that relying too heavily on federal money will put the state budget in an increasingly difficult position as more federal money is spent to service the national debt — which just surpassed $18 trillion — and entitlement spending.

The concern over federal dollars is sure to factor into the debate over expanding Medicaid, which is a key part of the Democratic party’s legislative agenda. The governor’s budget proposal would expand Medicaid to tens of thousands of Montanans, relying heavily on federal dollars. Total Medicaid costs are projected to be $1.431 billion in 2015 according to LFD, with federal dollars accounting for $935 million of that number. Factoring in the proposed expansion, total Medicaid costs are expected to rise to $1.669 billion by 2017, with $1.08 billion of that number coming from federal dollars.

Bullock has also relied on $10 million in federal grant money to launch public pre-kindergarten programs in 16 Montana communities. Securing the federal grant is part of a larger proposed program by the governor for statewide public pre-kindergarten. For that, he will need another $37 million from the state legislature.