The 10 Least Efficient States For 2025 Include an Unexpected Mix of Red and Blue

National Business Capital's report exposes which states are wasting taxpayer dollars - and why the list includes rural and urban areas

HAUPPAUGE, N.Y., Jan. 23, 2025 /PRNewswire/ -- Alaska and Wyoming are failing taxpayers, topping the list of the least efficient states for 2025. National Business Capital's inaugural report on state waste determined these states rank #1 and #2 respectively, relying heavily on federal funding - a surprising twist, given their sparse populations. These states are typically seen as fiscally conservative, but their struggles with budget deficits, high federal aid dependency, and inefficient state spending defy expectations. 

Data researchers at the national lending platform for business owners, discovered that 60% of the bottom 10 states are in the Northeast, where densely populated hubs like New York, Massachusetts, and Connecticut are plagued by runaway spending and bureaucratic inefficiency.

This report doesn't just name the least efficient states; it reveals why they've landed there. From sky-high reliance on federal dollars in Alaska to the Northeast's inability to control education and healthcare spending, the findings highlight inefficiencies in every corner of the country. As mentioned, red states, which scored better overall, aren't immune: Wyoming, Alaska, and Arkansas all appear in the bottom rankings.

The full study is available HERE:

Key Findings

1. Alaska and Wyoming are at the Bottom: Alaska tops the list with the worst efficiency score, relying on federal aid for 39% of its revenue. Wyoming follows closely, dragged down by persistent deficits.
   
   
2. Northeast is Struggling: Densely populated states like New York, Massachusetts, and Connecticut are spending big but not necessarily delivering results.
   
   
3. Red States Lead in Efficiency—Mostly: On average, red states scored 46.6 compared to blue states' 57.7, but inefficiencies still surfaced in conservative states like Arkansas (41st).
   
   
4. Federal Dependency is a Problem Nationwide: Red states rely on federal funds slightly more than blue states - 30% versus 27%.
   
   
5. Budget Deficits are Rare but Concerning: Only two states, Alaska and Wyoming, ran deficits in 2022 despite the broader inefficiencies highlighted in the report.

"Taxpayers deserve better than what they're getting in these states," said Joe Camberato, CEO, National Business Capital. "This data makes it clear that efficiency isn't just about numbers; it's about leadership and priorities. The states at the top of this list need to do better."

THE 10 LEAST EFFICIENT STATES FOR 2025

1. Alaska (score out of 100): 77.8
2. Wyoming (score: 77.2) 
3. Vermont (score: 73.5) 
4. Maine (score: 70.6)
5. Washington (score: 69.0)
6. Connecticut (score: 68.6) 
7. New York (score: 65.8) 
8. Massachusetts (score: 65.5)
9. Arkansas (score: 63.7) 
10.Rhode Island (score: 62.8)

THE 10 MOST EFFICIENT STATES IN 2025:

41. Arizona (Score: 37.8 out of 100)
42. Oklahoma (35.9)
43. Georgia (34.9)
44. Virginia (33.5)
45. Tennessee (32.9)
46. Idaho (31.4)
47. Texas (30.8)
48. Iowa (30.6)
49. Florida (24.3)
50. Utah (20.6)

METRICS

• UI Improper Payments Rate (5%)
• Local Governments Per 100,000 People (10%)
• Medicaid Administration Cost as Percentage % of Medicaid Spending (15%)
• Education Spending Per Head (15%)
• Federal Funding as % of Total Revenue (12.5%)
• Annual Revenue vs Expenses (7.5%)
• Number of Deficits (15%)
• Highway Condition (12.5%)

About National Business Capital:
NationalBusinessCapital a pioneer of non-bank financing, provides non-asset-backed financing solutions ranging from $250K to $10MM. Since 2007, the company has financed billions of dollars while innovating how business leaders access growth capital. The team's approach to each transaction allows clients to maximize financing options.

SOURCE National Business Capital