Red state bailout? New York gets 91 cents back in fed aid for every tax dollar it pays, DiNapoli says

U.S. Senate Majority Leader McConnell arrives for a news conference on Capitol Hill in Washington
As Senate Majority Leader Mitch McConnell continues blocking substantial new federal aid to New York, his home commonwealth of Kentucky receives substantially more federal aid per capita than New York every year.
REUTERS/Jonathan Ernst

Despite the derision from Senate Republicans, New York taxpayers are pumping plenty of cash into federal coffers but aren’t getting nearly as much back in financial assistance from Washington, state Comptroller Thomas DiNapoli reported on Thursday.

According to an analysis, New York received 91 cents in federal funding for every tax dollar it paid to the government. Only New Jersey has received less per tax dollar, getting just 82 cents back from Washington.

Add it all up, and New York taxpayers paid out $23.7 billion more than it received back in federal spending during the 2019 fiscal year. 

For months now, New York lawmakers have been calling for additional federal aid to alleviate budget crunches and economic woes related to the COVID-19 pandemic. But despite the disparity in tax payments, Senate Majority Leader Mitch McConnell of Kentucky and his Republican colleagues have dragged their feet on passing any substantial new relief bill — with McConnell once deriding the concept as a “blue state bailout.”

Comments like that provoked the ire of Governor Andrew Cuomo, who noted New York’s tax disparity back in April when appealing for economic relief from Washington.

“New York is a state of givers. We put more money into the federal pot every year, number one,” Cuomo said on April 24. “And now he (McConnell) wants to look at New York and say, ‘You’re bailing us out?’ Just give me my money back, Senator! It’s just ridiculous.”

Kentucky, by the way, gets the fifth-most value for its tax dollar nationwide, according to DiNapoli — gaining $2.05 in federal aid for every tax dollar it pays to Washington — giving the commonwealth a $1.14 advantage over New York.

Other states benefitting the most off of federal tax dollars, according to DiNapoli’s report, are New Mexico ($2.83 in federal aid for every dollar it pays out), Mississippi ($2.50), West Virginia ($2.43) and Alabama ($2.17).

The comptroller said that New York needs every federal dollar it can get now amid the economic suffering from COVID-19, and with state and local governments staring at the prospect of massive, devastating financial cutbacks to close budget deficits.

“In what has become a familiar and troubling story for the Empire State, New Yorkers send significantly more to Washington than we get back,” DiNapoli said in a statement. “At a time when the pandemic has shrunk local and state government revenues, shut down businesses and hurt families across New York, it’s never been more critical that we receive much-needed support from the federal government.”

Most of the federal funding New York receives is largely devoted to major social programs such as Medicare, Medicaid, SNAP food assistance and Supplemental Security Income. The Empire State also received $73.4 billion in grants in 2019, the second-highest total in the nation, with more than half of that grant money directed to Medicaid. 

The tax disparity for New York may only get worse in the year ahead, DiNapoli warned. Population changes in the 2020 Census may risk New York losing further government resources and representation in Congress.

One out of ever three dollars in the state budget comes from the federal government, DiNapoli noted. 

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