DATE: Thursday, July 31, 1997               TAG: 9707310001

SECTION: LOCAL                   PAGE: B11  EDITION: FINAL 

TYPE: Opinion 

SOURCE: Patrick Lackey 

                                            LENGTH:   96 lines

PROCUREMENTS: VIRGINIA IS PIGGY NO. 1 AT THE FEDERAL TROUGH THE REASON FOR VA.'S SUCCESS CAN BE SUMMED UP IN THREE WORDS: "LOCATION, LOCATION, LOCATION.'

The next time Gov. George F. Allen rails against the rapacious federal government or you file your federal income taxes, think of this number to ease the pain: $1.42

That's how much Virginia got from the federal government in fiscal 1996 for every dollar it paid in federal taxes. Virginia made out!

Add up corporate, individual-income and payroll taxes, plus all other federal taxes and levies, and Virginia's federal tax burden was $5,578 per resident. But the commonwealth got back $7,535 per resident - mostly in federal grants, wages, direct payments to Virginia residents (including Social Security and Medicare) and federal purchases from Virginia companies.

Virginia has fared well at the federal trough for some time. In fiscal 1986, the commonwealth got back $1.43 for each buck paid. And in fiscal 1996, Virginia ranked first among all states in federal dollars per resident. The $7,535 it received was far above the national average of $5,121. Some states got less than $4,000 per resident in federal money.

You might say that Virginia occupies the prime spot at the federal trough. We're No. 1!

Our leading position is surprising in one way. No state does worse than Virginia at obtaining federal grants. In fiscal 1996, the anti-fed commonwealth and its local governments received only 61 percent of the national per-capita average in federal grants.

The next worst state, Florida, received 71 percent of that average. Even ``Live free or die'' New Hampshire received 84 percent. In the grants department, Virginia underperforms badly. But grants aren't the only way Washington spreads money around.

Contrary to what you might have heard on talk radio, the federal government does not bury tax dollars in a hole or burn them in a pit. The dollars are spent for all manner of purposes, some more sensible than others.

Of the total money the federal government collected in fiscal 1996, the Census Bureau says 89.3 percent went to states in four forms: grants, federal payroll, direct payments and federal procurements. The rest went for paying interest, foreign aid, and miscellaneous items.

How the different states made out at the federal trough is detailed in a report this month by the Tax Foundation, a nonpartisan research organization. It's the Washington group that computes how many hours and minutes you have to work each morning just to pay federal, state and local taxes. Most of the numbers in this column are from that report.

Virginia won the federal sweepstakes, despite being last in grants and only average in federal direct payments to individuals, because the federal payroll in Virginia is huge - nearly four times the national average - and because federal procurements from Virginia companies, again on a per-capita basis, were more than four times the national average.

The reason for Virginia's success can be summed up in three words familiar to Realtors: ``Location, location, location.'' Virginia occupies a prime spot at the federal trough because it occupies a prime spot on the map, adjacent to Washington.

Companies wanting to do business with Washington often have headquarters in Northern Virginia. Also, many Northern Virginia residents are on the federal payroll.

Without Northern Virginia, the commonwealth probably would be about average at collecting federal dollars, although Hampton Roads has shipbuilding contracts and the Norfolk Naval Base.

The state with the second-largest per-capita take in federal dollars is Maryland, also adjacent to Washington.

Generally, the Tax Foundation reports, per-capita federal spending is spread evenly across the nation. Virginia and Maryland are among the exceptions.

The states that get the greatest return for each federal tax dollar paid usually are the states with the lowest incomes and thus the lowest federal tax burden. They get an average amount of federal dollars per capita but pay below average amounts of taxes.

Again, Virginia's an exception. More typical is Mississippi. It received a fairly average $5,590 per resident in federal money in fiscal 1996 but paid only $3,571 per resident in federal taxes. Thus it got $1.64 back for each buck paid.

Coversely, high-income New Jersey paid high federal taxes and got only 69 cents in federal money for every federal tax buck paid. It ranks last in that department.

Ironically, the states that get the most back for each federal buck paid are generally the states that are most anti-Washington in mood and rhetoric: low-income states in the South and West. While the states that get the least back for each federal buck are the most pro-Washington in mood and rhetoric: high-income states, many in the Northeast.

Go figure.

There is no moral to this story except that Virginia, whether it admits it or not, owes a great deal to the federal government - more than most states. The federal government takes money from other states and spends it here. That way leads to prosperity.

One last point: Virginia's location next to Washington is an unearned gift. The state is lucky. But the state's last-place ranking in federal-grant dollars per resident is not the result of luck. It is due to Virginia's failure to pursue grants aggressively or, in at least a few cases, it refusal to accept them. MEMO: Mr. Lackey is an editorial writer for The Virginian-Pilot.

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