(The Center Square) - A new report lists Alaska as the most dependent on the federal government.
Released by personal finance website WalletHub, the report evaluates states based on their return on taxes paid to the federal government, federal funding as a share of state revenue and share of federal jobs. Based on these three metrics, Alaska landed at the number one spot for most federally dependent in the nation.
Return on taxes paid to the federal government was calculated by dividing federal funding by IRS collections. Federal funding as a share of state revenue reflected the proportion of state revenue that comes from the federal government in the form of intergovernmental aid in 2020, the report said.
In general, red states appeared more dependent on the federal government than blue states.
Among the most federally dependent were West Virginia, Mississippi, Kentucky, and New Mexico. The least dependent were Illinois, Kansas, Utah, Washington, and New Jersey. The report emphasized how Illinois having the highest tax rates in the nation contributed to it being ranked among the least federally dependent while Alaska, with the lowest tax rates, was listed as the highest.
With no sales tax or state income tax, Alaska relies on oil investments for its revenue.
Alaska’s Department of Revenue released its revenue forecast for Spring 2023, where it projected a decrease of $246 million for fiscal year 2023 and a $679 million decrease for fiscal year 2024. The expected decrease in revenue is due to a lower outlook for oil price and production, according to Department of Revenue Commissioner Adam Crum.
Oil prices for Alaska North Slope (ANS) averaged a little over $91 per barrel in 2022. That has dropped to $85.25 per barrel for 2023 and is expected to go down to $73 per barrel in 2024, the Department of Revenue said. That, plus a forecasted decrease of oil production by 6,500 barrels per day in 2023, means less revenue for the state of Alaska in the next two years.
Overall, Crum said the Unrestricted General Fund revenue is forecasted to be $3.6 billion in 2023 and $2.7 billion in fiscal year 2024.
