() For the third year in a row, New York State received more funding from Washington, D.C. than it paid in federal taxes, according to a new fiscal watchdog report.
The report by state Comptroller Tom DiNapoli found that New York generated $361.8 billion in federal taxes in fiscal year 2022 and received $383 billion in federal spending, meaning the state received $1.06 for every dollar it sent to Washington.
The national average was $1.28, according to the report.
Although the Empire State was well below average, wealthy blue states have often sought to use their revenues as leverage to slam poorer states that receive more federal funds while also tending to oppose federal overreach in favor of states’ rights.
The report found that only five states—Massachusetts, New Hampshire, New Jersey, California and Washington—paid more taxes than they received back from Washington in fiscal year 2022.
That is likely to change in the FY2023 data, however, as both Massachusetts and New Jersey declared states of emergency due to the immigration crisis cause by President Joe Biden’s open-border policies.
California and Washington likewise have been hit with tighter finances due to the monetary strains from illegal immigration and homelessness, among other issues that have drained their budgets.
Much of the excess in federal handouts has either resulted in additional money being printed—thereby adding to the inflation crisis—or compounding the federal debt, which is now approaching $35 trillion and adding an additional trillion roughly every hundred days.
DiNapoli said while pandemic aid is winding down, New York still benefited from the additional federal funding in the form of enhanced program funding, federal grants and other sources of revenue.
“Federal pandemic spending had a significant impact on New York,” DiNapoli said in the report. “Even though spending for relief purposes decreased markedly in FFY 2022, this support played a major role in New York continuing the pandemic-era trend of receiving more in federal expenditures than it generated in federal tax payments.”
New York generated $18,388 per capita, ranking it third in per capita contribution to the federal treasury, which was 32.4% higher than the national average of $13,888, according to the report.
The state received $19,464 per capita, ranking it 11th in per capita federal spending, 9.3% higher than the national average of $17,804, DiNapoli said.
New York’s per-capita tax contribution ranks highly in most categories, except for excise taxes, where it ranks last, according to the report.
On a per-capita basis, individual income taxes represent the largest portion of taxes paid at $11,095 – 41.6% higher than the national average of $7,834, DiNapoli said.
New York ranked first on per-capita corporate income taxes at $1,976, $701 higher than the national per capita level of $1,275, the report noted.
How much money New York gives to Washington and gets back in return has long been a sticking point between the state and federal governments.
The Empire State is often considered Washington’s biggest cash machine, and in years before the pandemic, the state regularly received tens of millions of dollars less from the federal government than it sent to the Beltway.
In fiscal year 2018, New York paid $26.6 billion more in taxes to the federal government than it got back in federal spending—the highest deficit among the 50 states, according to a previous report from DiNapoli’s office.
For every tax dollar paid to Washington in FY18, New York received 90 cents in return—well below the national average of $1.21 during that fiscal year.
But during the COVID-19 pandemic federal spending ramped up substantially, resulting in a positive balance of payments for all states and ensuring that New York and other states collectively received more in federal funds than they paid in taxes.
In his report, DiNapoli warned that New York’s balance of payments with Washington could turn negative again as federal spending returns to its pre-pandemic levels.
“As we return to a pre-pandemic level of federal support, New York’s balance of payments may again shift back to negative,” DiNapoli wrote. “Significant levels of new funding are available to New York under the federal Infrastructure Investment and Jobs Act and the Inflation Reduction Act, though the future impact for this analysis is still unclear.”
