State Budget Time In New York And Florida
/Many people of a libertarian bent, such as myself, often express frustration with Republican politicians for their lack of dedication to small-government principles. But then, the alternative is Democrats, who have somehow turned into the party that believes there are no longer any limits on government spending and taxes. If you think there isn’t a whole lot of difference between how the two parties govern when in power, you might want to compare what’s going on these days in Florida versus New York. In Florida, both state legislative chambers, and the governorship, are controlled by Republicans; in New York, it’s Democrats.
April is the time of year that the states tend to finalize their budgets for the coming fiscal year. In New York, the state Constitution sets an April 1 deadline for enacting a budget for the upcoming [April 1 to March 31]fiscal year. The deadline is often missed, sometimes by a lot, but this year the process has just concluded. Florida also has a July 1 to June 30 fiscal year, but the process of enacting the budget can extend into June. Nevertheless, by this time there are good indications where it will end up.
So let’s compare where this is going in the two states. As background, these two large states are very comparable in population, although headed quite rapidly in opposite directions. Florida just recently (2014) passed New York in population, and per U.S. Census estimates its population reached 21,733,312 in 2020, an increase of 1.12% (or about 240,000) from 2019. New York’s 2020 population per Census estimates was 19,336,776 — already more than 12% behind Florida after six short years. That figure represented a decline of about 127,000, or about 0.65%, from the 2019 figure. New York also lost population in 2017, 2018 and 2019, and the rate of decline has accelerated each year.
Florida
Governor DeSantis presented his 2021-22 budget proposal on January 28. The total amount of the proposal is $96.6 billion. Last year’s budget was $92.3 billion, so the current proposal represents an increase of $4.3 billion, or 4.6%. That might seem somewhat high compared to a CPI increase of only 1.4% in 2020; but then, Florida did have a 1+% population increase, and in addition the Governor claims that some $2.6 billion of the $4.3 billion budget increase represents spending related to Covid-19 matters. Also, some $6 billion of the $96.6 billion is proposed to be put into reserves rather than immediately spent.
As stated, the Florida budget is still in negotiation between the Governor and Legislature. On March 26, the State Senate made its counterproposal, which is $95 billion, or $1.6 billion less than the Governor’s proposal. Senate President Wilton Simpson made a statement that included the following:
Due to the COVID-19 pandemic, revenues that fund our day-to-day government are down, and we know we have some big expenses on the horizon, which means we had to make difficult choices throughout the budget.
Taxes? As we all know, Florida has no income tax, nor does either the Governor or Legislature propose to enact one. Indeed, there are no proposed tax increases in either the Governor’s or the Senate’s budget proposals, and the Governor even proposes some modest tax reduction, in the form of a one-week back-to-school sales tax holiday.
Note that the Florida budget proposals were already in balance without tax increases prior to the enactment of the big Federal largesse handout in the so-called “American Rescue Plan.” This piece from Florida Politics on March 26 reports that Florida expects to receive “around $10 billion” from the handout, and that Governor DeSantis is proposing to spend some $4.1 billion of that, in addition to his prior budget proposal of $96.6 billion.
New York
This week the State Legislature has enacted a 2021-22 spending plan of some $212 billion. The plan still awaits final approval from the Governor; however, reports are that he has agreed to the plan as passed. Spending for 2020-21 was budgeted at $194 billion, so the new plan represents an increase of some $18 billion, or 9.3%, again in an environment of 1.4% inflation as measured by the CPI. And New York’s population is declining significantly.
The $212 billion is far more than double Florida’s proposed spending, even if you assume that Florida will add the $4 billion of Federal handout money to reach a budget of around $100 billion. And recall that Florida’s population is now about 12% more than New York’s, so on a population-adjusted basis New York’s state-level government spending is about 2.4 times that of Florida.
According to this piece from NBC, New York State’s share of the latest federal handout is $12.5 billion (plus another $10 billion or so going to New York City and other local governments). In other words, New York State is getting 25% more federal money than Florida, for a state with 12% less population. Hey, we were “harder hit” by the virus — otherwise known as far greater economic decline and unemployment brought about by the strict “lockdown,” even though the lockdown had no discernible effect on the death rate, and Florida’s death rate is far lower. (As of today, the Covid-19 death rate for Florida is 1599 per million, and for New York 2660 per million.). Anyway, the federal handout is just a pure reward to New York for ridiculously irresponsible spending that accomplishes nothing.
So what exactly is New York spending all this money on? Those of you out there in the hinterlands probably are getting very little reporting on just how crazy New York has become. Here are a couple of things that people are talking about:
A fund of $2.1 billion for “undocumented workers.” The idea is simply to pass out cash, just like the feds have been passing out cash, but to people who didn’t qualify for the federal checks because they are illegally in the country. The New York Times quotes the state Republican Party Chairman Nick Langworthy as calling this one “woke insanity.”
Another fund of $2.3 billion to pay back rent for tenants who fell behind during the pandemic and the year plus long “eviction moratorium.”
And that’s only the start. There’s lots of fresh money for every left-wing cause with an outstretched hand. Here is the press release from the State Senate touting all the new spending. Highlights include new billions for K-12 education (where New York already spends well more than double per student what Florida spends), lots more for the State University, and billions for “green” (wind and solar) energy (that basically won’t work).
In fact, the increased spending is so much that even the $12.5 billion of federal largesse won’t cover it. And thus, we have tax increases. As the State Senate puts it, we are finally “ensuring the ultra-wealthy pay their fair share.” The top state income tax rate will go from 8.82% to 9.65% on income over $1 million ($2 million for a couple), to 10.3% on income over $5 million, and to 10.9% on income over $25 million. For New York City taxpayers, these are in addition to a City top rate of 3.88%.
Supposedly, these new tax rates are going to bring in $4 billion a year of the $18 billion of added annual spending. I’ll be willing to bet it will be more like half that. At this point, anybody who can figure out how to avoid recognizing a high income in New York is going to do it.
Anyway, it’s really not much of a mystery why Florida grows and New York shrinks.
UPDATE, April 19: A reader correctly points out that New York’s fiscal year is April 1 to March 31, not July 1 to June 30 as I had incorrectly stated. It is corrected above.