State Continues to Lag in Federal Money

Total federal spending in Wisconsin totaled $8,339 per capita in 2013. In only three states did the federal government spend less per person, according to a new report – “States Race for Federal Money”– from the Wisconsin Taxpayers Alliance (WISTAX).

State and local governments here received only $1,667 per capita in federal aid, 11.1 percent less than the national average and 39th among the states.

The relative dearth of federal aid is one reason Wisconsin’s taxes are above average.

Historically, federal spending in Wisconsin has been relatively low. During 1993-2008, the highest the state ranked in per capita federal spending was 48th. However, the Badger State benefitted more than most states from federal stimulus spending in 2009-10.

Federal spending here rose 35.7 percent above 2007-08 levels; only Connecticut had a larger increase.

Wisconsin’s rank among the states climbed to 32nd in 2010. But, as the federal stimulus wound down, Wisconsin returned to the ranks of states not competing well for federal funds.

Federal spending is classified in five broad categories and Wisconsin ranked among the bottom half of states in each during 2013.

• Retirement and disability payments: The federal government spent $3,419 per capita in Wisconsin, primarily on Social Security disability payments. Spending here was similar to the U.S. average ($3,381) and the state ranked 27th among the states.

• Other direct payments: Spending on Medicare, federal unemployment insurance, food stamps, and other direct federal payments totaled $2,477 per capita, 12 percent less than the U.S. average and 37th among the states.

• Procurement: Federal purchases of Wisconsin goods and services totaled $563 per person, a figure that was less than half the national average ($1,289) and 36th highest.

• Federal salaries and wages: The amount of federal salaries and wages paid in a state is heavily influenced by location of major military installations. Without one here, these payments totaled $363 per capita in Wisconsin, 61.4 percent below the U.S. average and last among the states.

• Grants: Grants to governments, organizations, and individuals – a category dominated by Medicaid – totaled $1,506 per capita in Wisconsin, 6.7 percent below the national average and 30th among the states.

Most federal grants are paid to state or local governments and can impact state-local spending and taxation there. In 2012, state-local governments in Wisconsin received $1,667 per capita from Washington, an amount that was 11.1 percent less than the U.S. average and 39th highest among the states. In that same year, state-local taxes claimed 11.5 percent of personal income and were 12th highest among the states.

A simple comparison highlights the relationship between federal dollars and state-local taxes. In 2012, state-local spending per capita was about the same in Wisconsin ($8,169), Pennsylvania ($8,122), and West Virginia ($8,285). However, Pennsylvania received $175 per capita more in federal aid than did Wisconsin, and its taxes were $163 per capita less. West Virginia received $768 more per capita in federal money and its taxes were $833 per capita less.

WISTAX is a nonpartisan organization devoted to public policy research and citizen education. A free copy of Wisconsin Taxpayer magazine, “States Race for Federal Money: Wisconsin Continues to Lag” is available by visiting wistax.org; emailing [email protected]; calling 608.241.9789; or writing WISTAX at 401 North Lawn Ave., Madison, WI 53704-5033.