Federal spending–Nevada’s rankings among the states

Posted on

Federal spending in Nevada, which amounts to 17.7 of the state’s Gross Domestic Product (GDP), is slightly below the national average of 19 percent, ranking the Silver State 30th among the 51 states and District of Columbia. Nevada ranks lower, however, in both the total amount and per capita Federal spending at 36th and 48th, respectively. Those and other comparisons are found and derived from a recent report by the PEW Charitable Trusts based on Fiscal Year (FY) 2013 data (the latest available).

The state-by-state distribution of Federal funding formerly was provided by the U.S. Census Bureau in its annual Consolidated Federal Funds Report, but that report was discontinued following production of the FY 2010 data. Through its Fiscal Federalism initiative, the PEW Charitable Trusts has now assumed the mantle of providing similar comparative data in 5 categories.

These categories are the same as reported in the previous Census Bureau publications, and include: retirement benefits, nonretirement benefits, grants, contracts, and salaries and wages. The “retirement benefits” category primarily includes Social Security retirement and disability payments (amounting to 75 percent of all Federal funding), along with smaller such Federal retirement and disability payments and veterans benefits. “Nonretirement benefits” refer to payments to individuals, almost two-thirds of which comes from Medicare, and also include such programs as food assistance, unemployment insurance, student financial aid, and other assistance payments. About half of the “grants” category consists of Medicaid, and includes other funding to state and local governments, individuals and non-Federal agencies in a variety of areas such as education, health care, housing, transportation, and research grants. Similarly, in the “contracts” category for goods and services, defense purchases account for more than half of Federal contracts, and the remainder includes a range of services such as medical equipment, information technology, and catering. The final category is for “salaries and wages” paid to Federal employees, of which approximately one-third goes to military personnel and the remainder to civilians.

A related PEW paper compares the distribution of Federal funds across states, and how states vary in their reliance on the different types of Federal resources. For example, demographics obviously play a major role with the higher population states, such as California, Florida and New York, which receive larger total amounts in Federal spending due to their size. Location and economic realities also impact states like California, Washington, DC, Maryland, Texas and Virginia, which rank in the top five for government and defense-related contracts.

More than two-thirds of Federal spending in Nevada comes from both (Social Security) retirement benefits (37.5 percent) and non-retirement benefits (Medicare) (29.5 percent). The remaining distribution of Federal funds in Nevada is grants (11.7percent), contracts (12.4 percent) and Federal wages and salaries (8.8 percent).

Table 1 provides information on the rankings for the total amount of Federal spending among the Intermountain West states.

Table 1. Total Federal Spending—Rankings FY 2013

State Retirement Benefits Nonretirement Benefits Grants Contracts Salaries & Wages Total
Arizona 16 14 19 9 17 16
California 1 1 1 2 1 1
Colorado 25 26 23 15 13 22
Nevada 34 34 39 31 36 36
New Mexico 36 36 33 18 28 33
Texas 3 3 3 3 3 2
Utah 37 37 36 33 30 38

As expected, California and Texas rank among the highest in the actual total amounts of Federal spending, with Nevada, New Mexico, and Utah at the lower end of the spectrum.

Accounting for population, Table 2 shows the rankings among the Intermountain West states for Federal spending on a per capita basis.

Table 2. Per Capita Federal Spending—Rankings FY 2013

State Retirement Benefits Nonretirement Benefits Grants Contracts Salaries & Wages Total
Arizona 34 23 37 10 29 20
California 50 30 20 21 31 37
Colorado 46 49 40 15 9 36
Nevada 42 38 49 24 33 48
New Mexico 21 29 7 4 6 6
Texas 49 36 41 16 26 39
Utah 51 51 44 25 22 51

By this comparison, New Mexico has the highest per capita ranking among the Intermountain West states, and is among the highest in ranking for all states, particularly in the categories of grants, contracts and Federal salaries and wages. Nevada has one of the lowest per capita rankings, trailed only by Utah.

Table 3 provides another measure of comparison ranking with Federal spending relative to each state’s GDP among the Intermountain West states. As noted by PEW, this standard measurement reflects the importance of total Federal spending against each state’s total economic activity. The report cautions, however, that for several reasons it does not measure the amount of economic activity that is directly attributable to Federal spending in each state.

Table 3. Federal Spending relative to GDP—Rankings FY 2013

State Retirement Benefits Nonretirement Benefits Grants Contracts Salaries & Wages Total
Arizona 14 11 22 7 23 13
California 45 36 25 23 36 40
Colorado 38 46 42 16 17 37
Nevada 30 25 48 23 29 30
New Mexico 13 15 5 4 6 4
Texas 43 38 47 20 31 41
Utah 42 47 40 27 22 45

By any measure, Nevada ranks low in Federal spending, and particularly in the area of grants that cover Medicaid, education, housing, transportation and other programs. As the Silver State continues to attract new residents, particularly retirees, Nevada should see its share of Federal spending increase in the coming years, especially in the categories of retirement and nonretirement benefits. Nevada can and should do more, however, to increase its share of Federal grant spending to enhance the lives of its residents.