Federal pandemic relief funds resulted in New York having a positive balance of payments with Washington, with the state ranking 42nd in federal fiscal year 2023 on a per capita basis, according to a report by state Comptroller Thomas DiNapoli.

This is the fourth year in a row that New York has had a positive balance of payments, after a long history of sending more tax dollars to Washington than it receives back. For every tax dollar paid to Washington in 2023, the state received $1.06 in return; the national average was $1.32.

“With the end of pandemic aid, this may be the last year we find New Yorkers with a positive return from Washington,” DiNapoli said. “Actions taken by the Trump Administration and Congress may cut health care, food assistance, infrastructure and other critical programs to the detriment of all New Yorkers. Major cuts in federal funding simply cannot be replaced by state taxpayers, will reduce the services the state provides and will exacerbate the long-standing history of New Yorkers sending more of their hard-earned tax dollars to the federal government than they get back.”

New Jersey, Massachusetts and Washington were the only states to have a negative balance. Prior to the pandemic, New York consistently ranked among the states with the largest negative balance of payments.

DiNapoli warned that actions currently being taken and under consideration by the new administration in Washington may significantly change the relationship between the federal government and states. Cuts have been announced to education, health, and environmental programs, and additional actions may reduce grants to state and local governments, limit aid to individuals, and decrease federal spending on payrolls. Most states would lose from such actions, although which will be most impacted remains to be seen.

Key findings in DiNapoli’s report:

– In 2023, federal expenditures for each U.S. resident were on average $4,089 more than they paid in federal taxes; for New York residents, it was $912 per capita.

– New York generated $16,355 per capita, ranking it third in per capita contribution to the federal treasury, and received $17,266 per capita, ranking it 21st in per capita federal spending.

– Federal expenditure areas where New York ranks high include Medicaid ($3,082 per capita, second), Supplemental Nutrition Assistance Program or SNAP ($533 per capita, fourth), rental assistance and public housing ($295 per capita, first), and Supplemental Security Income ($238 per capita, sixth).

– Federal expenditure areas where New York ranks low include federal employee wages and salaries ($459 per capita, 42nd), veterans benefits ($445 per capita, 49th), federal employees retirement ($216 per capita, 50th), and highways ($103 per capita, 49th).

New York generated $320.1 billion in tax collections, 7.5% of all U.S. tax collections in 2023, while the state represented 5.8% of the nation’s population. At $16,355, New York’s per capita contribution to the federal treasury was 27.8% more than the national level, and New York’s per capita tax contribution ranks highly in most tax categories.

Individual income taxes represent the largest portion of taxes paid; New York’s were $8,745 per capita – 35.9% higher than the national average of $6,433. The second largest component of federal revenues reflects payments for social insurance taxes and contributions, including sources that finance programs for Social Security and Medicare, among others. New York’s per capita contribution for such payments, $5,472, was 14.2% above the national level of $4,792, ranking it seventh. The state ranked first on per capita corporate income taxes with $1,840, 47% higher than the national per capita level of $1,252.

The report notes the federal budget plays an integral role in state economies and budgets. Millions of New Yorkers rely on Social Security as a staple of household income, Medicare and Medicaid for essential health care, and SNAP for basic food needs. In education, federal grants provide important support for services to children with disabilities or limited English proficiency, breakfast and lunch programs, and college loans. Other federal funds pay for essential capital projects and services. These include highway and mass transit construction and maintenance, housing, job training, environmental protection, public safety initiatives and more.

Executive Orders issued by the President paused disbursement of funds from the Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA). The state expected to receive $13.6 billion in IIJA funds and $2 billion from the IRA, backing projects ranging from roadways and bridges to mass transit to broadband to clean energy and resiliency. While some funding has been unfrozen, it is unclear how much the state and local governments and state residents can rely on these funds.

Other federal actions have also impacted the receipt of funds by states. In New York, these include the potential claw back of approximately $158 million in Elementary and Secondary School Emergency Relief aid from school districts and the freezing of $367 million in funds for public health, addiction services, and mental health programming. This loss of federal funding translates into weaker state services in crucial areas such as virus surveillance, laboratory support and testing, transitional housing for individuals in recovery, and mental health supports.

This report is the ninth issued by DiNapoli’s office detailing the differences among the 50 states with respect to what they pay in federal taxes and how much they receive in federal spending. New York’s former U.S. Senator Daniel Patrick Moynihan pioneered the concept of this balance of payments report with his first report in 1977.