But, while we're on the subject of pork, what should we get? What federal pork should South Dakota want? What makes sense? It's well and good to, at a minimum, get back all the federal dollars we put in. We do that quite well. According to this analysis we get back $1.49 for every $1.00 we put in.
That's a heck of a return on our investment. But, is it right? We can't expect to lower the budget deficit and cut taxes while we take money from other taxpayers or create more debt so we in South Dakota can take out more than we put in. Can we?
California, Connecticut, and Delaware get considerably less federal spending back as a share of taxes paid. Is that right? Maybe. Many huge US businesses are based or incorporated in those states. For example, 58% of Fortune 500 companies are based in Delaware. Thus, when someone from South Dakota buys a product or service from a Delaware company the profit on that sale is taxed in the company's state of incorporation. So that tax, which may be recorded as a Delaware tax, was actually paid out of a South Dakota pocket.
Okay, that accounts for some of the disparity. But certainly federal dollars are spent in South Dakota at a greater per capita rate than in other states. In FY 2003 South Dakota received about $8.9 billion in federal expenditures and assistance, that's $11,639 for every man, woman, and child in the state. Where is that money going?
$1.8 billion was retirement and disability. Can't do much about that now - that's pretty much fixed. $807 million was loans. That comes back presumably but at a discount. Some of the rest is Medicare ($600 million), crop insurance ($421 million), crop disaster program ($159 million), medical assistance program ($391 million), insurance ($1.9 billion). But what about the other $2.8 billion?
Some of it is knitted into larger systems such as highway funding. We have more miles of federal highway per capita then most states. If we, as a country, want federal highways from Wyoming to Minnesota or from Nebraska to North Dakota we will need to spend a lot of dollars ($284 million in FY 03) in South Dakota. Those dollars go to South Dakota contractors, employees, retailers, and generate South Dakota tax revenue. But they also serve a greater purpose and serve people from all over the country.
Some of it is spent here on a discretionary basis. Ellsworth Air force Base doesn't have to be in South Dakota. It's an open question if South Dakota is the best location for Ellsworth. Does it make sense to base those bombers as far as possible from where they might be needed? Would it make more sense to split them up and locate them on coastal bases. I know, that's heresy. The base is a huge deal in Western South Dakota. In FY 2003 Ellsworth paid out almost $200 million in salaries alone. Defense accounted for another $300 million in federal expenditures in South Dakota. That supports a lot of retail trade and sales tax revenue. That's a big enough deal to generate some serious lobbying business as Jason van Beek notes here.
But, despite our relative skill at getting our snouts in the trough, we do have our weak spots. A 2000 study by the Rand Corporation concluded: "South Dakota ranks 52nd among the 50 states, District of Columbia, and Puerto Rico in terms of the amount of federal R&D dollars received annually." Wow, where was that famous Daschle clout on R & D?
Anyway, federal money strikes me as the "elephant in the living room" of our state's political discourse. As soon as I can figure out how to operate a calculator I'm going to get more into that.