PORTLAND — With talk of a possible federal shutdown again sounding through the halls of Congress, a report from the Pew Charitable Trusts gives a new look at the significance of federal spending for Maine’s economy.
Between contracts, retirement payments, benefits, salaries and grants, federal money passed on to Maine in 2013 was equal to about 30 percent of the state’s total economic output, ranking fourth in the country. The state ranked sixth nationally for federal spending per person, estimated at $12,104 per resident.
The report does not measure the direct impact federal spending has on the state’s economy, but aims to give a sense of scale to the federal money coming into the states. Pew said its new annual report aims to fill a gap left when the U.S. Census Bureau stopped publishing an annual report of the geographic distribution of federal spending in 2012.
In total, Maine was 39th for the total amount of federal dollars coming into the state last year, dwarfed by far more populous states. But ranked by federal money per capita and compared with the state’s total output, Maine is among the highest in the country.
Nationally, federal spending of $3.1 trillion in the states made up about one-fifth of the country’s gross domestic product. In highest-ranking Mississippi, federal spending made up about 33 percent of that state’s output, compared with about 30 percent in Maine.
Much of that grant spending is likely due to the presence of warship builder Bath Iron Works here and its major competitor Huntington Ingalls in Pascagoula, Mississippi.
The bulk of federal money came to Maine through about $5.6 billion in retirement benefits like Social Security and veterans benefits and another $4 billion in nonretirement benefits, like Medicare, food assistance and student financial aid. Social Security and Medicare payments make up the bulk of both categories.
Maine is fifth ranked by retirement benefits as a share of GDP, behind West Virginia, Alabama, Mississippi and South Carolina. Those rankings reflect, in part, states with older and slow-growing populations.
In some cases, those payments reflect money coming into the pockets of Maine residents, but high health care costs can boost the nonretirement benefit spending. That is, a person with Medicare coverage might not have a better or worse financial situation if a covered medical procedure cost less.
But as a percentage of total economic output, those benefit categories weren’t the highest for Maine. Nationally, only Vermont had federal grants equal to a larger share of GDP, at 6.5 percent.
The $3.2 billion in federal grants to Maine in 2013 equaled about 5.9 percent of Maine’s GDP for the year.
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