Arizona State Smart

Federal Funds in Arizona


Get State Smart about how the federal budget affects you. The federal budget is made up primarily of your dollars – and it's your right to know what's happening with that money.

Every day, residents of Arizona are affected by the federal budget. Federal dollars show up in your community through public services, roads and bridges, public assistance programs, clean air and water, and much more. You probably pay taxes to the federal government, send your children to schools that receive federal funds, or know someone who works for a federal agency or contractor. The impact of federal dollars flowing to and from Arizona is significant.

Based on the most recently available data, Arizona receives about $67 billion dollars from our federal budget over the course of a year, between federal grants and contracts to business and governments, federal assistance going right to its residents, and federal employees working there. Because the most recent data represent different time periods, we have combined data across different years to create this current best estimate.

At National Priorities Project, our mission is to make the federal budget understandable to all Americans and ensure that it reflects the priorities of all Americans. We hope State Smart helps you make your voice heard.

Note: State Smart reflects the most current budget data available. We update these numbers as we get them, so check back often. All numbers here are expressed in 2015 dollars.

State of Arizona

About 6.7 million people live in Arizona, our 48th state and the birthplace of Emma Stone. The largest ethnic racial group is White, followed by Hispanic. The median age is 37.

AIAN = American Indian or Alaska Native, NHPI = Native Hawaiian or Other Pacific Islander
Source: U.S. Census Bureau, American Community Survey 2014 1-year estimates

Arizona Unemployment

In 2014, the Arizona unemployment rate was 6.9%, compared to 6.2% for the U.S. overall. The official unemployment rate counts only those people who are actively seeking work. Many economists think it's important to take a broader view and count not only the officially unemployed, but also those who have given up looking for work or are unwillingly working part time because they can't find a full-time job.

Arizona Poverty

Overall, Arizona has a higher poverty rate than the U.S. The median household income in Arizona is $50,744, lower than the U.S. median of $54,382.

How Federal Money Gets to Arizona

There are four basic ways that federal dollars flow into Arizona, impacting you and your neighbors.

  1. Federal dollars in the Arizona budget, which fund public assistance programs.
  2. Direct benefits from the federal government, paid to individuals.
  3. Payments to vendors to perform federal contracts.
  4. Salaries paid to federal employees working in the state.

1. Federal Dollars in the Arizona Budget

Every state budget in the U.S. relies on money from the federal government, and many local budgets do too. Nationally, the percentage of state revenues that come from federal dollars jumped from 27.8% to 35.5% between 2008 and 2010, as Recovery Act money trickled down. In 2013, the most recent year on record, federal money made up 30% of revenues collected by the 50 states.

In 2013 Arizona got $10.5 billion dollars from the federal government, which is 34.9% of its total revenue.

That $10.5 billion funds public assistance programs like Temporary Assistance to Needy Families (TANF), Medicaid, the Low Income Home Energy Assistance Program (LIHEAP), and Community Development Block Grants.

Here's a breakdown for some of that money. To see these amounts over time and compare them to other states, visit the Federal Priorities Database Grants to States dataset.

$87.4 million

Housing & Community Development: $87.4 million

  • Public Housing
  • Section 8

$6.9 billion

Public Assistance: $6.9 billion

  • TANF
  • Medicaid
  • Block Grants

$1.8 billion

Education: $1.8 billion

  • School Nutrition
  • Head Start
  • Title 1

$856.4 million

Transportation: $856.4 million

  • Public Airports
  • Highways
  • Mass Transit

$91.6 million

Natural Resources and Agriculture: $91.6 million

  • Conservation, Flood Prevention, Fish and Wildlife

Did you know: There are 7,229,000 alpacas in Arizona. (2012 Census of Agriculture)

$329.0 million

Health and Hospitals: $329.0 million

  • WIC
  • Veterans' Care
  • EPA Superfund

On top of the federal money going to the Arizona state budget, an additional $1.0 billion went directly to local governments within the state. This money funds everything from Community Development Block Grants to housing and disaster assistance to public transit improvements.

2. Federal Aid to Arizona Residents

In 2014, Arizona residents received about $38.2 billion in direct benefits from the federal government. That's about $5,671 per person.

Most of that money is Social Security and Medicare benefits, but it also includes food stamp benefits, unemployment benefits, and federal education assistance like Pell Grants.

3. Federal Contracts in Arizona

In 2014 the U.S. paid about $451.5 billion to vendors to perform contracts ranging from supplying the military with weapons to building websites. These contractors performed work in every single state, including $10.1 billion worth in Arizona, about $1,499 per resident.

Agency-wise, the biggest spender in Arizona was Department of Defense, which oversaw 77% of federal contract money in the state. Rounding out the top five list are Department of Defense, Department of Veterans Affairs, Department of Health and Human Services, and Department of Homeland Security.

In the last five years, the total amount of money spent on federal contracts in Arizona has decreased. The Federal Priorities Database has details and maps comparing Arizona contracts to the rest of the country:

4. Federal Employees in Arizona

87,378 people in Arizona worked for the federal government in 2014. The average annual compensation for these workers - in other words, wages plus benefits - was $88,249. When compared to the average compensation for all jobs in the state, that's higher.

In total, those 87,378 federal workers in Arizona received $7.7 billion in compensation, about 5% of all wages and benefits earned by people who worked in the state. Compare that to Washington D.C., where federal workers represent 38% of all earned compensation , and Hawaii, where federal workers earn 20% of all compensation in the state.

To see how federal employees and compensation have changed over the years, visit the Federal Priorities Database:

Hint: there are fewer federal workers in Arizona than there used to be.

How Arizona Residents Contribute to the Federal Budget

Arizona residents and businesses contribute to the federal budget by paying:

  • income and self-employment taxes
  • business taxes
  • payroll taxes that fund programs like Social Security and Medicare
  • excise taxes on things like gasoline
  • estate and gift taxes

In 2014, Arizona residents and businesses paid $34.9 billion in federal taxes. Most of that is money paid by or on behalf of individuals in the form of income taxes, self-employment taxes, and payroll taxes.

NPP's Federal Priorities Database has this breakdown over time as well as a comparison of Arizona to other states in the U.S.

Another way of looking at federal taxes is to add up the categories and track the totals over time. As you can see below, per-person federal tax contributions dropped in nearly every state between 2008 and 2009: in the U.S. overall, they declined by 18%. The numbers have been rising in recent years and are now about equal to their pre-recession amounts.

NPP's Federal Priorities Database maps all of our business, individual, and total tax dollars, including a per-person breakdown. Hint: Arizona tax collections are going up.

Arizona Faces of the Federal Budget

I have a lot of friends who get Pell grants. More

Will from Tucson, AZ | Map

Has the federal budget impacted you, your family, or your community? Submit your story to our Faces of the Federal Budget project, and we'll include it in State Smart.

What's Next for Arizona?

Based on the most recently available data, Arizona receives about $67 billion dollars from our federal budget over the course of a year, between federal grants and contracts to business and governments, federal assistance going right to its residents, and federal employees working there. Because the most recent data represent different time periods, we have combined data across different years to create this current best estimate.

Share What Your Learned

Want a deeper dive?

Visit NPP's Federal Priorities Database, where you can create embeddable maps and download dozens of localized federal budget datasets, including the ones that power this website:

Want to get even more specific?

You can answer the questions below and many, many more by exploring the entire suite of NPP's interactive data tools.

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