NY's Positive Federal Payments Balance May End as Pandemic Aid Stops
Editorial StaffThe Facts -
- New York has a positive balance of payments with Washington in FFY 2023.
- New York received $1.06 for every dollar paid, below the $1.32 national average.
- Federal cuts may end New York's positive balance, hurting services and funding.
New York's Balance of Payments with Washington: A Closer Look at Federal Fiscal Year 2023
New York has recorded a positive balance of payments with the federal government for the fourth consecutive year, a feat driven by pandemic relief funds. In the federal fiscal year (FFY) 2023, New York ranked 42nd in terms of federal spending per capita, according to a report released by State Comptroller Thomas P. DiNapoli.
This positive trend contrasts with the state's historical position of contributing more in taxes than it receives back. Specifically, for every dollar sent to Washington, New York got back $1.06, which is below the national average return of $1.32.
Comptroller DiNapoli expressed concern about the future, stating, “With the end of pandemic aid, this may be the last year we find New Yorkers with a positive return from Washington.” He highlighted potential risks stemming from policy changes that could adversely affect health care, food assistance, and infrastructure programs.
Only New Jersey, Massachusetts, and Washington have a negative balance of payments among the states. Historically, New York has also been in this bracket before the pandemic's boost.
DiNapoli also highlighted the potential impact of current federal policy shifts, which may reduce spending on education, health, and environmental programs. These changes could lead to fewer grants and reduced aid, impacting state and local budgets significantly.
Key findings from DiNapoli’s report include:
- On a national average, federal spending per resident exceeded taxes paid by $4,089, whereas in New York, this surplus was $912 per capita.
- New Yorkers contributed $16,355 per capita to federal taxes, ranking third in contributions, and received $17,266 per capita in federal spending, placing them 21st in the nation.
- New York ranks high in federal spending categories like Medicaid ($3,082 per capita) and SNAP benefits ($533 per capita), while ranking low in areas such as federal payroll and veterans' benefits.
In terms of tax contributions, New York collected $320.1 billion in federal taxes, accounting for 7.5% of the nation’s total while constituting 5.8% of the U.S. population. The state leads in per capita contributions for corporate income taxes, surpassing the national average by 47%.
Federal funding plays a crucial role in supporting essential services for New Yorkers, including Social Security, Medicaid, and educational programs. However, recent Executive Orders have paused some disbursements from the Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA), creating uncertainties about future funding.
Other federal decisions have also impacted funding for New York, such as the potential retrieval of $158 million from school districts and the freezing of $367 million meant for health services. These financial shifts could weaken state services in critical areas like public health and mental health support.
This detailed report is the ninth installment from DiNapoli’s office analyzing state versus federal financial interactions, a concept initially introduced by former U.S. Senator Daniel Patrick Moynihan in 1977.
Further Reading:
New York’s Balance of Payments in the Federal Budget, Federal Fiscal Year 2023
Interactive Map with Balance of Payments Breakdown in the United States
Downloadable Excel File with Additional Data
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