Analysis: South Carolina among the most federally dependent states



(The Center Square) — South Carolina ranks among the most federally dependent states.

According to an analysis from personal finance company WalletHub, the Palmetto State ranked ninth. Nationally, Alaska topped the list, ahead of New Mexico and Kentucky, while New Jersey ranked as the least federally dependent state, besting California and Kansas.

“In South Carolina, federal funding plays a significant role, contributing over 35% towards the state’s revenue,” WalletHub analyst Cassandra Happe told The Center Square via email. “Despite being ranked 33rd in federal funding as a share of state revenue, South Carolina residents receive a remarkable return on their taxes paid to the federal government. They earn $3.17 for every $1 paid in taxes, which is the highest ranking for this metric.

“However, it’s important to note that only around 1.62% of the state’s workforce is employed by the federal government, which reflects a relatively lower share of federal jobs compared to other states,” Happe added. “Even though South Carolina is not among the most federally dependent states, its residents benefit from a notably high return on federal tax dollars. This contributes to various aspects of the state’s infrastructure, education, and public services.”

South Carolina’s roughly $40.9 billion fiscal 2024-25 budget includes more than $13.6 billion in federal funds.

“To address South Carolina’s ranking in federal dependency, policymakers can focus on several areas,” Happe said. “First, diversifying revenue sources, investing in education and workforce development, and promoting infrastructure projects can stimulate economic growth.

“Second, fostering entrepreneurship and innovation ecosystems and ensuring efficient utilization of federal funds can work towards reducing dependency while promoting long-term fiscal sustainability,” Happe added. “Finally, prioritizing long-term fiscal planning can mitigate risks associated with federal reliance, ultimately fostering economic resilience and prosperity for the state.”

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