For every dollar New York sends to Washington D.C., it receives about 91 cents back in federal spending – compared to a national average of nearly $1.22, according to a report released today by State Comptroller Thomas P. DiNapoli.
New York ranked 46th in the nation in its balance of payments between the amount it generated in federal taxes and the amount of federal government spending it received. DiNapoli’s report builds on pioneering work by the late Senator Daniel Patrick Moynihan that looked at the federal budget’s impact on New York.
“The Empire State pays more to Washington than it gets back,” DiNapoli said. “A high-income state like New York generates more in federal taxes than other states, but we also have significant costs, and the continuing imbalance raises questions about equity for New Yorkers. Our Congressional delegation has pushed hard over the years to increase New York’s slice of the pie and these continued efforts should be encouraged.”
In federal fiscal year 2013, the U.S. government spent nearly $3.5 trillion, and brought in nearly $2.8 trillion in revenue, with a budget deficit of $680 billion. That same year, the latest for which detailed figures are available, New York state generated an estimated $214 billion in all taxes for the federal government, which ranked third behind California and Texas. New York provided $19.9 billion more in tax revenue than it received in return from the federal government.
According to DiNapoli’s report, New York contributed $10,896 per capita in tax revenue to the federal budget, nearly a third more than the national average, and received an estimated $9,885 in per capita federal spending, slightly below the nationwide average.
The federal budget deficit of $680 billion represented spending that was funded by borrowing. As a result, federal spending was greater than federal revenue raised—in the aggregate, the states received more than they paid for.
DiNapoli’s report also found:
- Overall, 39 states had a positive balance of payments with the federal government, and 11 were in the negative.
- New York generated almost $120 billion in individual income taxes alone, which was 9.2 percent of the total amount collected in individual income taxes by the federal government. New York’s per capita individual income taxes of $6,099 were 47 percent higher than the national average of $4,139, ranking New York sixth in the nation. Connecticut was first at $8,479.
- The largest of the broad spending categories in the federal budget represents direct payments to individuals for a variety of programs such as Social Security, Medicare, benefits for veterans and for retired federal employees, and food assistance. Spending for direct payments totaled nearly $2 trillion nationwide in federal fiscal year 2013. New York received an estimated $123 billion in this category, with a per capita average that was close to the national figure.
- In the second largest spending category in the federal budget, grants to state and local governments, New York received $53.1 billion and fared better than 46 states on a per capita basis. Medicaid makes up almost half of all federal spending for such grants; New York’s per capita Medicaid funding from Washington was the highest of any state.
- In two other major categories – procurement and federal employee compensation – New York received less than half the national per capita level of federal spending. The state’s combined total in these two areas, $18 billion, was less than 3 percent of the nationwide total because of low levels of military procurement and federal salaries.
Federal spending is not apportioned to the states by any single formula or common method. Rather, dozens of statutory provisions as well as a wide range of economic, demographic and political factors drive the state-by-state distribution of expenditures. Examples include: each state’s population; its numbers of residents in poverty and of those eligible for Social Security and Medicare; income levels; and the states’ own policy choices.
DiNapoli’s report notes that unless they are revised, provisions of the Federal Budget Control Act of 2011 will require reductions of hundreds of billions of dollars from baseline spending growth over the coming decade. Ongoing concern over the federal budget deficit continues to generate discussion of potential changes in federal programs for health care, public welfare, transportation, education and other services that are essential to New Yorkers, as well as calls for tax policy changes that could affect the state in significant ways.
Read the report, “New York’s Balance of Payments in the Federal Budget,” or go to: http://osc.state.ny.us/reports/budget/2015/fed_budget_fy2013.pdf
Excel files providing detailed figures beyond those in the report can be downloaded by clicking http://osc.state.ny.us/reports/budget/2015/fed_budget_fy2013_data.xlsx