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Thursday
Apr142011

Despite Calls to Cut Spending, States Rely Heavily on Federal Funds

Adam Gault/Thinkstock(WASHINGTON) -- As debates over the budget and the deficit escalate and the small-government, cost-cutting Tea Party gains more clout in Washington, federal programs are coming under fire.

But at the same time, federal dollars increasingly are in demand, according to an ABC News analysis.

For all the rhetoric against federal spending and encroachment on states' autonomy, governors rely heavily on federal funds, especially given the slow economy.  Not one governor turned away all the federal stimulus money their states received and, despite opposition to the Democrats' health care plan, governors continue to take in the money that law allocated.

Sen. Rand Paul, R-Ky., founder of the Senate Tea Party caucus, has advocated for the abolishing of the Department of Education.  But doing so could have heavy consequences on the Bluegrass State.  Federal funds accounted for about 20 percent of public school funding in fiscal year 2010, according to the Kentucky Department of Education.  Cutting the department could take away more than $1 billion from Kentucky's schools.

Even in other areas, Kentucky is heavily dependent on federal funds, even though Paul and the state's other outspoken Republican, Senate Minority Leader Mitch McConnell, have railed against government spending.  Per capita federal spending amounts to more than $11,500 in fiscal year 2009, making Kentucky the 12th-ranked state for dependence upon federal funds, according to the Census bureau.

Other conservative states whose leaders have assailed federal money also rely heavily on dollars from D.C.

Today, through about 1,200 grant programs, the federal government allocates about $600 billion annually to states, representing close to one-third of the typical state's budget, including Republican-leaning ones like Texas and Tea Party-heavy states like Arizona and Oklahoma.

At the same time, the proportion of money that states give back to the federal government in the form of taxes relative to what they get in return has shrunk. Virtually all states -- whether red or blue -- get more than $1 per capita back for every tax dollar paid to Washington, D.C.

Copyright 2011 ABC News Radio

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    Despite Calls to Cut Spending, States Rely Heavily on Federal Funds - Politics News - ABC News Radio

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