Historic federal government relief funds, provided in response to the COVID-19 pandemic, lifted Washington’s New York per capita balance of payments from penultimate in the 2019 federal fiscal year (FFY) at 40th in 2020 among states, according to a report released by State Comptroller Thomas P. DiNapoli.
New York received $146 billion, or $7,236 per capita, more in federal spending than residents paid total federal taxes in 2020. Overall, the state received 6, 4% of total federal spending, compared to 5.9% in the previous fiscal year. He noted that all states had a positive balance of payments for 2020 due to the unprecedented influx of federal aid.
Prior to 2020, the gap between taxes paid by New Yorkers and expenditures received by the state fluctuated, but remained consistently negative during DiNapoli’s five previous tax analyses, ranging from $19.9 billion in 2013 and up to $40.9 billion in 2016. The late Sen Daniel Patrick Moynihan pioneered the concept of this balance of payments analysis when he represented New York in the US Senate, believing that this work could produce a fairer outcome for all Americans.
“The influx of federal relief funds has been essential to help states manage the pandemic, but the money is temporary,” said DiNapoli. “Federal assistance has helped stabilize New York’s economy, but it is limited and will not resolve the long-standing imbalance in payments between states. As federal pandemic spending declines, the underlying trends we saw before the pandemic are likely to return, with New York giving more to Washington than it is getting back. As our rebuilding process continues, more needs to be done to achieve a fairer distribution of federal funds in New York. »
For every tax dollar paid in Washington, New York received $1.59, up from 91 cents the year before but still below the national average of $1.92. By this measure, New York ranks 44th for 2020. New Jersey received the least for every tax dollar paid at $1.36, while at $3.66, New Mexico reported the bigger return, as it has done for the past five years.
New York generated 7.8% of the $3.2 trillion in tax payments to the federal government in 2020. Compared to 2019, New York tax dollars fell at a rate more than twice that than the national average, partly reflecting the impact of the pandemic, including an 11% drop in New Yorkers’ personal income tax payments, compared to a national drop of 6.4%.
The state’s per capita federal taxes were 27.6% higher than the national average, ranking it fourth behind New Jersey, Massachusetts and Connecticut. In total, New Yorkers paid about $250 billion in 2020 compared to $265 billion in 2019, ranking third among states behind California and Texas.
Federal spending in New York, including grants to state and local governments as well as direct payments to individuals, has grown faster than in other states. In total, New York received $19,589 in federal spending per capita, ranking above two-thirds of states. This amount was 5% higher than the national figure of $18,599 per capita. New York’s ranking rose to 17th in federal spending among states in 2020, up from 24th in 2019. The improvement was primarily due to increases in temporary federal grants and unsubsidized spending in response to the pandemic.
Direct payments to individuals for Social Security, Medicare, veterans benefits, food assistance and more were the largest category of federal payments to states in 2020, totaling more than $3.6 trillion. dollars, or 58%. This category grew by more than $1 trillion from fiscal 2019, including large amounts of pandemic-related unemployment compensation and household assistance, which accounted for more than 20% of spending of this category. New York received about $228.3 billion in direct payments to individuals, with a per capita figure slightly above the national average.