My View: Debtor states are most vocal about federal spending
August 2, 2013
Have you ever noticed that GOP-leaning states are among the first to cry foul if the hated federal government turns down their request for disaster aid? Or did you notice, too, that some states' politicians who decry federal spending the loudest get more money from the feds than they pay back to the federal treasury in taxes?
The New York Times (June 23, 2013) reported outrage on the part of Texans, victims of the West, Texas fertilizer plant blast, who were turned down for $17 million in FEMA (Federal Emergency Management Agency) disaster aid because FEMA told Texas they had enough funds in its coffers to provide the aid themselves. FEMA regulations, the Stafford Act, requires federal funds to aid only those states that lack resources to address recovery. Texas has just given its citizens $1 billion in tax relief, and their rainy day fund has another $8 billion in it.
The president had already authorized the federal government to cover 75 percent of the state's cost for debris removal and emergency responders and $25 million to the state and affected families and another $8 million in grants and low interest disaster loans for individuals. The state had then asked for an additional $17 million to cover public infrastructure that was uninsured because it claimed it could not cover it. On the other hand, Texas is the same state that just refused to cooperate with Obamacare, turning down an increase in Medicaid funds that would have covered 30 percent more than what's covered now. Give Texas credit for being ideologically purely conservative on that particular issue, but there will be pressure to be more pragmatic. The cost to Texas for such coverage? Zero, zip, nada for the first several years.
The question will be how long constituents will tolerate that and wonder why they do not have coverage like other states or why continued masses of uninsured are flooding their expensive emergency rooms and passing uncompensated costs to the insured. The eyes of Texans will then be upon states like Colorado that accepted Medicaid expansion, and whose health and financial wellbeing of its citizens benefited.
The Economist Magazine online (Aug. 1, 2011) made a study of fiscal transfers between states and the federal government from 1990-2009 and ranked them by states receiving more from the feds than they paid in taxes. These debtor states ranking highest in receiving federal funds and lowest in tax contributions to the federal treasury were New Mexico, Mississippi, West Virginia, Alabama, Arizona, Louisiana, South Carolina, Virginia, Kentucky, Vermont, Maine, Montana, and both Dakotas.
Some of those states have high numbers of Native American reservations that receive federal funding, but ironically, that list also contains many states that are the home of the most vocal Tea Party tax protestors.