Numbers game

For every tax dollar Nevada residents send to D.C., the state gets 95 cents back, which ranks Nevada 23rd highest in the nation. If that’s the case, it would be a sharp, almost shocking improvement in Nevada’s situation.

The figure comes from an organization called WalletHub, a personal finance website that is better known for list-making—“Best state to have a baby”; “Most livable beachside community”; “Most fun cities in America,” and so on. Its lists have often been targets of criticism.

In a study of which states are the most or least “dependent” on the federal government, it ran a table labeled “Return on taxes paid to the federal government,” with the result that put Nevada 23rd. This graph was cited in an Oct. 6 Washington Post article.

By contrast, in January the Tax Foundation placed Nevada 47th.

The difficulty with such competing lists is that sometimes they measure different things while labeling them similarly. Some lists refer to the reliance of state governments on federal funding, or the federal share of state funding. Others simply describe it as money returned to the states. There is a difference between the two. Social Security payments, for instance, would not be included in the first. They would be included in the second.

Then there is the issue of sources. The Tax Foundation finding in January relied on Census Bureau data. WalletHub used Internal Revenue Service figures.

And some make calculations that others do not. For instance, the Tax Foundation does this:

“During fiscal years in which the federal government runs deficits some spending is financed through borrowing. This creates implicit tax liabilities for states that must be repaid eventually. To incorporate these implicit tax liabilities into the analysis, the following adjustment was made to state tax burdens: First, the total federal tax burden is increased by the size of the federal deficit. Next, this total burden is allocated among states based on each state’s proportion of the actual federal tax burden. Finally, adjusted spending-per-dollar-of-tax-ratios are calculated by dividing actual expenditures by the adjusted tax figure, effectively making figures deficit neutral.”

As best we could tell, WalletHub does not make a similar calculation. However, Washington Post fact checker Glenn Kessler said WalletHub arrived at its figure of 23 for Nevada with a calculation “that combined three different metrics.” Those metrics were “Return on Taxes Paid to the Federal Government” (which was figured by “by dividing federal funding in U.S. dollars by IRS collections in U.S. dollars”), “Share of Federal Jobs” and “Federal Funding as a Share of State Revenue.”

When WalletHub considered only which are the states most reliant on the federal government, Nevada drops to 44. Even that is higher than most competing lists.

There is a further issue with some of these lists. They are inevitably used politically to indicate how good a job a state’s congressmembers are doing bringing home the bacon. For instance, in 2011, the Nevada Republican Party posted some news clips on its website under the heading “More Problems Securing Federal Dollars.” The clippings referred to federal funding Nevada did not get:

“Nevada is dead last in per-capita federal funding for state programs such as health, education and transportation, according to a new report from the Brookings Institution.”

“Nevada has the nation’s worst unemployment—14.2 percent—but ranks 46th in stimulus benefits.”

“Southern Nevada has 2 percent of the country’s homeless, but gets just 0.4 percent of $1.7 billion in funding from the Department of Housing and Urban Development.”

The site then posted a statement by a GOP official: “Senator Harry Reid loves to tell Nevadans that ’nobody can do more,’ but when it comes to securing federal support nobody has done less for his home state.”

In a 2007 letter to the editor of the Las Vegas Review-Journal, GOP official Dan Burdish noted that Nevada congressmembers Reid, John Ensign, Shelley Berkley and Jon Porter all held influential posts in D.C. “We probably have the strongest congressional delegation in the country, and yet we cannot get to the national average in money returned to the states,” he wrote. “If there is a funding shortage for highways and education, it can be laid at their feet.”

The problem with this interpretation is that how much money returns to the states is influenced as much by state as by federal legislators. Nevada traditionally has opted out of numerous federal programs because it did not want to pony up the usually small matching funds.

In 2013, the Brookings Institution’s John Hudak called attention to this lack and wrote, “States with power in Congress tend to receive more grant money. Swing states tend to receive more grant money. States with deeper need tend to receive more grant money. Nevada tends to be all of these things. … Attention must be paid to the effort—or the lack of effort—of the state government. For many grant programs, regardless of the final recipient of money, state agencies are required to serve as the applicant. … Federal funding helps balance state and local budgets and can reduce local tax burdens. Additional grant money to Nevada does not increase federal deficits, either. Congress has already appropriated the money. If Nevada does not get the funding, another state will get more. These states will have better schools, more effective health care systems, more efficient energy sources, higher levels of exports and cutting edge research. The Silver State will have the status quo.”

During the troubled administration of Nevada Gov. Jim Gibbons, he threatened to reject federal funds for both highways and unemployment compensation. This was during the Great Recession, and he received harsh criticism and eventually accepted the funds.

Many of these studies are packaged in language that suggests an agenda, and if it doesn’t, one appears when it is reported by many of today’s online sites. Some use the more pejorative term dependent rather than reliant. One site even referred to the state as “mooches” for accepting funds returned from D.C. Remarkably, this was the politically conservative CNS News, formerly known as Conservative News Service.

One graph in the Atlantic Monthly of WalletHub data was labeled “States by return on taxpayer investment.” Taxes are paid, not invested. An investment is a willing expenditure, and not all taxpayers are willing.