One of the primary funding sources for budget-writers in Texas is federal funds. These are dollars that Texans have paid in federal income taxes and fees that go to fund programs in our state. In 2016, for example, Texans paid $261 billion in federal taxes and the State of Texas received $39.5 billion back in grants. That's about 15 percent of our total federal taxes. Among the 50 states, about 20 percent of federal tax dollars to go state governments and those grants generally go to education, healthcare and infrastructure.
The largest amount of federal aid comes by direct payments to individuals in the form of social security, disability, Medicare and Unemployment compensation. But when it comes to writing a state budget, federal agencies use formulas to fund certain grants, while others are grants made on a competitive basis, where each state has to make the best case as to why they should receive the funding. State lawmakers then use those funds to provide services to citizens.
The Comptroller of Public Accounts estimates that just over 35 percent of Texas' net revenue for the fiscal year came from the federal government, that being just above average for the past 15 fiscal years. In comparison to other states, Louisiana is the state most dependent upon federal aid at 42 percent, while North Dakota is the last place, only receiving 18% of their state budget from the federal government.