Kentucky among the ‘most federally dependent states.’ How will Trump cuts affect it?
A review of U.S. Census Bureau data by personal finance website WalletHub found Kentucky ranks second overall among states most dependent on federal funding.
In WalletHub’s analysis, Kentucky ranks just behind Alaska — a state defined by its vast size, harsh climate and remote communities — as the most federally dependent state.
The site compiled its state rankings based on three factors: the return on taxes paid to the federal government (in other words, how much state residents get back for every federal tax dollar they pay), the share of federal jobs and federal funding as a share of overall state revenue.
Living in a federally dependent state confers huge benefits to its residents. As WalletHub analyst Chip Lupo put it, “For every dollar residents of the top states pay in taxes, they get several dollars back in federal funding, which often leads to higher-quality infrastructure, education, public health and more.”
That said, it also makes those states more susceptible to cuts in federal spending advanced by President Donald Trump’s administration and the Department of Government Efficiency, or DOGE.
A recent directive from President Trump to cap federal research funding through the National Institutes of Health would cost the University of Kentucky $40 million, for example.
UK is the largest employer in Fayette County and one of the largest in the state, employing more than 26,000 people. The university’s top research priorities include cancer, cardiovascular diseases, diabetes, obesity and substance use disorders, to name a few.
So how much federal funding does Kentucky receive, and what share of jobs in the state are federal jobs? Here’s what to know.
How much federal funding does Kentucky receive?
According to WalletHub, Kentucky ranks second overall among the most federally dependent states in large part because it receives a huge amount of federal funding compared to the taxes its residents pay.
Per its analysis, for every $1 residents pay in taxes, they get $3.35 back in federal funding. About half of the other states receive less than $1 back for every tax dollar they pay.
According to WalletHub, federal funding makes up a large share of Kentucky’s revenue as well, at more than 46%. In Alaska, the most federally dependent state, more than 50% of its revenue comes from federal funding.
In fiscal year 2022, federal transfers accounted for 38.1% of Kentucky’s government revenues, 11.6 percentage points higher than the national average, according to the website USAFacts.org, citing U.S. Census Bureau data.
The money helps state and local governments pay for infrastructure investments, education and health care for people with low incomes. About 1 in 3 Kentuckians get their health care through the state’s Medicaid program.
How many federal jobs are in Kentucky?
Only about 1.8% of Kentucky residents are federal employees, placing Kentucky near the middle of the pack among the 50 U.S. states, WalletHub’s analysis found.
Data from the Congressional Research Service points to a total of 23,118 federal civilian employees in the Bluegrass State. That data is current as of Dec. 20, 2024, and it does not include federal contractors or uniformed military personnel, such as those who staff Fort Knox and Fort Campbell in Kentucky.
It’s not certain how many of Kentucky’s federal employees have seen their jobs terminated amid DOGE’s cost-cutting campaign. Recent Trump administration and DOGE actions in Kentucky have targeted the following:
One fourth of federal staff fired at a Civil War site that housed Black Union soldiers
Mine safety offices tasked with conducting regular mine safety checks could close
Plans to cut 70,000 Veterans Affairs employees nationwide could include Kentucky employees. The agency helps veterans access health care and other services.
Cuts to probationary employees affect workers at Kentucky’s Mammoth Cave National Park and the Red River Gorge
Cuts by President Trump could cost Kentucky libraries and museums millions in federal grants
Layoffs affecting nearly 50% of federal Department of Education employees and efforts by the president to dismantle the agency via an executive order. Education leaders in Kentucky have warned eliminating the department would impact resources for teachers and students, particularly those experiencing poverty.
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