The federal government's decision to pause grants could have significant implications for state governments, as approximately 36% of state government revenue as of late 2022 came from federal grants, according to analysis by the Pew Charitable Trusts. A substantial portion of this funding is allocated to Medicaid, a program that offers health insurance to low-income individuals and is primarily funded by the federal government but administered by states, as reported by the General Accounting Office. During the Covid-19 pandemic, grants to states saw a notable increase due to relief and stimulus funding.
While a memo from the Trump administration exempted Social Security and Medicare from the grant pause, there was no specific mention of Medicaid. Louisiana emerged as the state with the highest reliance on federal funding, with slightly over half of its revenue originating from the federal government. In contrast, North Dakota stood out as the only state where less than a quarter of its revenue came from Washington.
