NEW YORK STATE'S BALANCE OF PAYMENTS WITH WASHINGTON

The federal government's tax revenues in each state are heavily influenced by the relative wealth of the state. Because New York is relatively wealthier than most other states, it sends proportionately more tax dollars to Washington than almost any other state. Some federal spending programs, such as Medicaid, are also influenced by the relative wealth of states.

While representing the Empire State in Washington, Senator Daniel Patrick Moynihan reported each year on New York's imbalance of payments with the federal government. In late 2001, The Public Policy Institute examined the data previously studied by Senator Moynihan to prepare an updated analysis. For fiscal 2000, the Institute found, New York suffered a deficit of some $47 billion in the balance of federal tax dollars and federal spending.

In fiscal 2001, as the attached table shows, New York continued to send far more dollars to Washington than it received in return. The state's deficit was $39.6 billion. Tax revenues the federal government collected on economic activity in New York – more than $166 billion – were roughly the same as in the previous year. The state collected nearly $127 billion in federal spending, an increase of some $7 billion that was driven largely by higher payments for Social Security, Medicare and education.

For the study, base data on tax revenue are from the Tax Foundation, a nonpartisan research group based in Washington. The Public Policy Institute allocates to New York State $8.1 billion in federal tax payments from individuals who live in New Jersey or Connecticut but work in New York. New Jersey residents paid $81 billion, and Connecticut residents $39 billion, in federal taxes. Approximately 7 percent of federal taxes collected in New Jersey, and 6.4 percent of those from Connecticut, are attributable to jobs in New York State, according to New York State Department of Taxation and Finance estimates for state taxes paid by New Jersey and Connecticut residents.

Base data on expenditures are from the U.S. Census Bureau's Consolidated Fiscal Funds Report for Fiscal Year 2001. In addition, The Public Policy Institute allocates to each state a share of the total interest paid domestically on federal debt during the year, based on the state's share of total federal tax payments. The total of such interest in federal fiscal year 2001 was $131 billion; New York's share, for example, was 8.1 percent of the total, or $10.6 billion.

States' Balance of Payments with Washington, 2001
(dollars in millions)
 
Taxes Paid
Spending Received
Surplus/Deficit
Alabama
22,437
33,205
10,768
Alaska
4,200
6,685
2,485
Arizona
30,057
32,392
2,335
Arkansas
12,476
17,469
4,993
California
264,344
206,245
-58,099
Colorado
33,898
26,618
-7,280
Connecticut
36,416
25,351
-11,065
Delaware
5,750
4,632
-1,118
Florida
110,294
107,395
-2,899
Georgia
52,225
50,822
-1,403
Hawaii
6,903
10,185
3,282
Idaho
6,683
7,977
1,294
Illinois
96,686
71,520
-25,166
Indiana
36,733
34,630
-2,103
Iowa
16,725
18,523
1,798
Kansas
16,503
17,806
1,303
Kentucky
20,509
27,210
6,701
Louisiana
21,371
29,249
7,878
Maine
6,904
8,643
1,739
Maryland
41,779
50,966
9,187
Massachusetts
59,779
48,188
-11,591
Michigan
67,886
56,185
-11,701
Minnesota
36,519
27,384
-9,135
Mississippi
12,094
21,023
8,929
Missouri
33,718
41,452
7,734
Montana
4,359
6,910
2,551
Nebraska
10,415
11,469
1,054
Nevada
15,014
10,631
-4,383
New Hampshire
10,315
7,006
-3,309
New Jersey
75,115
51,657
-23,458
New Mexico
8,487
17,156
8,669
NEW YORK
166,554
126,990
-39,564
North Carolina
47,579
47,748
169
North Dakota
3,288
6,169
2,881
Ohio
69,127
66,341
-2,786
Oklahoma
16,667
23,790
7,123
Oregon
21,241
19,826
-1,415
Pennsylvania
83,052
84,880
1,828
Rhode Island
6,990
7,458
468
South Carolina
20,799
26,070
5,271
South Dakota
4,293
6,095
1,802
Tennessee
33,225
38,986
5,761
Texas
134,809
121,571
-13,238
Utah
11,358
12,139
781
Vermont
3,731
3,984
253
Virginia
52,858
74,802
21,944
Washington
49,651
40,233
-9,418
West Virginia
7,793
13,064
5,271
Wisconsin
34,609
28,966
-5,643
Wyoming
3,583
3,824
241