New York currently faces a massive structural budget gap. The state is not bringing in enough revenues to fund its programmatic spending binges. And on top of that, the state is losing population to low-tax states like Florida. This exodus includes some of the state’s highest earners, corporations, and investment managers. Data suggest that the majority of households leaving New York for Florida have incomes over $150,000.
The state’s budget gap for the current budget period is $6.1 billion. Of that amount, $4 billion comes from the state’s Medicaid program, which provides health care for low-income households.
New York’s political climate ensures that the state keeps expanding the benefits provided through the program with no real concern for how to pay for them. The state’s Medicaid program already costs more per capita than any state in the country.
New York’s fiscal crisis is also distinguished by the fact that it is occurring during a robust economy. Usually programs like Medicaid encounter problems during recessions, when enrollment balloons and revenues decrease. Right now, enrollment in New York’s program is stable and they still can’t afford it. “Can’t afford it” is something of an understatement, in fact. This suggests that New York will be in major trouble during an economic decline.
Now, what do think New York is looking at doing in this situation? They have droves of high earners (i.e. their tax base) leaving the state for lower-cost destinations. They are watching the cost of their programs climb. Do you think they are going to cut back on spending?
Democratic State Assembly Speaker Carl Heastie (D-Bronx) said Tuesday the only way to combat the mammoth $6.1 billion budget deficit is to raise taxes.
“This is gonna be a tough budget year … unless money’s gonna fall from the sky,” Heastie told reporters in Albany.
“For us in the Assembly, we always believe in raising revenue.”
We always believe in raising revenue. Can’t you just picture the economic development bureaucrats in Florida laughing their asses off at this? From the golf course, naturally.