ALBANY — The federal government derives significantly more revenue from New York than what it returns to the state by way of various benefit programs and support for public services.
In fact, no other state experiences such a large imbalance in what it sends to Washington and what it gets back, according to a new financial snapshot of the relationship by state Comptroller Tom DiNapoli.
In the latest federal fiscal year, New Yorkers paid $23.7 billion more in federal taxes than the state received from Washington, DiNapoli said.
DO NOT SHARE EQUALLY
The issue of the imbalance in the state’s financial relationship with the federal government is getting a fresh look as congressional leaders face pressure to reach a compromise on a bailout package providing relief to state and local governments reeling from sharp revenue downturns amid the coronavirus pandemic.
“As this report makes clear, states do not share equally in federal spending, nor in generating federal tax receipts,” the comptroller’s report states.
The recent plunge in
revenues has stoked fears state and local governments may be forced to slash popular public services and trim their own payrolls at a time when the job market is tight.
DiNapoli calculated New York receives 91 cents in return for each dollar it sends to the federal government. The only other states that pay more in federal taxes than they garner in federal spending are California, Connecticut, Illinois, Massachusetts, New Jersey and Wisconsin, according to his report.
New York will likely continue to come up short on the exchange with the federal government because federal policies are designed to take from states with greater wealth and redistribute it to those with higher needs, said E.J.McMahon, senior fellow at the Empire Center for Public Policy, an Albany think tank.
“The imbalance will be larger if President-elect Joe Biden is able to enact his tax and budget priorities,” said McMahon, noting those plans would raise taxes on high income earners.
Gov. Andrew Cuomo has maintained New York was harmed by the 2017 federal tax plan capping deductions on federal returns for state and local tax payments. McMahon said that measure is likely to stay in effect while Republicans control the U.S. Senate.
Cuomo has also complained about the initial federal stimulus bill passed in March after it was negotiated by another top Democrat from New York, Senate Minority Leader Charles Schumer. While Schumer praised the measure, Cuomo branded it “just another slight to the people of this state.”
On Thursday, Schumer sparked optimism that a second stimulus bill could be advanced soon, telling reporters that “there’s been a little bit of a breakthrough” after aides to Senate Majority Leader Mitch McConnell, R-Ky., agreed to open talks.
“The staffs are going to sit down today or tomorrow to try to begin to see if we can get a real good COVID relief bill,” Schumer told reporters.
Joe Mahoney covers the New York Statehouse for CNHI’s newspapers and websites. Reach him at firstname.lastname@example.org