New York leads the nation in what it pays to the federal government compared to what it gets back from Washington, according to a report released today by New York State Comptroller Thomas P. DiNapoli. New York taxpayers paid $23.7 billion more in federal taxes than the state received in federal spending in federal fiscal year 2019.

“In what has become a familiar and troubling story for the Empire State, New Yorkers send significantly more to Washington than we get back,” DiNapoli said. “At a time when the pandemic has shrunk local and state government revenues, shut down businesses and hurt families across New York, it’s never been more critical that we receive much-needed support from the federal government.”

For every tax dollar paid to Washington, the state received $0.91, well below the national average of $1.24. New Jersey is the only state that received less, with a return of $0.82. New Mexico gets the most value at $2.83 per tax dollar paid, followed by Mississippi ($2.50), West Virginia ($2.43), Alabama ($2.17) and Kentucky ($2.05).

New York’s per-capita deficit of $1,219 in its balance of payments ranked 49 among the states. Only New Jersey is higher at $2,450. On the basis of total dollars, rather than dollars per capita, New York’s ranking was last among the states.

The gap between taxes paid and spending received in New York fluctuates from year to year, but has remained consistently negative in analyses of five federal fiscal years by DiNapoli, ranging from $19.9 billion in FFY 2013 up to $40.9 billion in FFY 2016.

As in past years, the imbalance reflects New York’s comparatively high federal tax payments. The state generated over $265 billion, or 8.1 percent, of the $3.3 trillion in federal tax receipts. By contrast, the $241 billion in federal spending the state received represented 5.9 percent of the nationwide total. DiNapoli’s report found:

• New York paid 8.9 percent or nearly $152 billion of the largest federal tax source, the individual income tax.
• The largest of the broad spending categories in the federal budget represents direct payments to or for individuals for a variety of programs such as Social Security, Medicare, benefits for veterans and retired federal employees and food assistance. New York received an estimated $148.1 billion in this category, with a per capita figure that was close to the national average.
• Major programs for which the state received higher-than-average per capita expenditures include Medicare, Medicaid, food assistance and Supplemental Security Income.
• Payments from Washington for federal employee retirement benefits and veterans’ benefits to New Yorkers were lower than average on a per capita basis.
• In the second largest spending category in the federal budget, grants to state and local governments, New York received $73.4 billion and fared better than 48 states on a per capita basis. Medicaid makes up more than half of all federal spending for such grants, and New York’s per capita Medicaid funding from Washington ranked second among the states.
• In two other major categories — procurement and federal employee compensation — federal spending in New York was less than half of the national average on a per capita basis. The state’s combined total in these two areas, $19.9 billion, was 2.4 percent of the nationwide total.

DiNapoli warned that the results of the 2020 Census may affect New York’s and other states’ balance of payments, in both the near and longer terms, as updated population counts influence the state-by-state allocation of funding in certain programs, as well as the size of each state’s Congressional delegation.

Federal funding makes up more than one in every three dollars in New York State’s budget. Stimulus and relief funding that Washington has provided in response to the coronavirus pandemic have been a financial lifeline for well over one million New Yorkers.

DiNapoli said the federal response remains incomplete. The state, its local governments, the Metropolitan Transportation Authority and other governmental entities will be forced to cut essential services, raise taxes and fees, and/or push costs to the future by borrowing to close today’s gaps if Washington does not provide additional direct aid.

Report
New York’s Balance of Payments in the Federal Budget

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