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Key Takeaways

• New York’s state and local revenues and spending per resident were about $19,500 in 2019. That’s more than double Florida’s figure of $9,300.
• Florida’s population is outpacing New York’s. In the average week in 2021, a net 4,200 people moved to the Sunshine State, while 6,800 New Yorkers moved out of the Empire State.
• New York’s per-capita income remains much higher than Florida’s. New York also boasts lower crime rates and more residents with health insurance.
• Florida’s homeless population has fallen by more than 50 percent since 2007, while New York’s has grown by almost 50 percent. Additionally, Floridians graduate from high school at a higher rate despite the Sunshine State’s lower spending on students.

Florida and New York are the third- and fourth-most populous states in the U.S., respectively, with more than 1-in-8 Americans living in them as of 2021 ().

But the two states are on very different trajectories — and have been for years. Florida is one of the fastest growing states in the country, while New York’s population is growing much more slowly than the national average. As Figure 1 shows, Florida’s population more than doubled between 1980 and 2020 (from 9.7 million to 21.5 million), while New York’s increased by just 15 percent (from 17.6 million to 20.2 million). While this partially reflects Florida’s popularity as a retirement destination, the Sunshine State is attracting newcomers of all ages. As of 2020, just 21 percent of Floridians were 65 and older versus 17 percent in both New York and the rest of the U.S. ().

Figure 1: Florida vs. New York Population (in millions), 1910-2020

These different population trends continued in 2021. Florida’s population increased by 211,000 despite a spike in COVID deaths, while New York’s declined by 319,000. Some speculate that Florida’s lower taxes (and no personal income tax) along with limited government are better for fostering economic growth and a brighter future than New York’s model of higher taxes and stronger regulation. These trends have also caused a dramatic shift in political power. Florida gained nine congressional seats (increasing from 19 to 28) since the mid-1980s, while New York has lost eight seats during that same period (falling from 34 to 26). However, it remains true that the average economic well-being in New York is much greater than in Florida. For example, per-capita income was 21 percent lower in Florida than in New York in 2021, while per-capita GDP in the Sunshine State was 43 percent lower than in the Empire State that same year.

This policy brief provides an overview of state and local economic policy in both Florida and New York with a focus on taxation and government services. It also highlights some key metrics of state and local government performance including health outcomes, educational attainment, crime, net migration, and economic well-being. Of course, many factors influence these outcomes beyond just government policies. We therefore also highlight the results from some recent research regarding the effects of alternative government interventions.

The size of state and local government in Florida and New York

Government activity is often measured by how much money comes through the door and how much is spent. But total revenues per capita and total expenditures per capita are far from perfect. They do not capture the effect of policies such as the minimum wage or most environmental regulations. However, since GDP per capita and income per capita are among the most frequently used measures of economic well-being, government revenues and spending are useful for gauging the size of this sector relative to the national economy.

As shown in Figure 2, U.S. state and local governments collected $4.07 trillion in revenues and spent $3.97 trillion during the 2019 fiscal year (we focus on 2019 because it is the most recent pre-COVID year though include some more recent data below as well) (). These revenue and spending figures represent $12,412 and $12,090 per U.S. resident and about 19 percent of U.S. GDP. Additionally, they are comparable to federal revenues and expenditures in the same year ($3.46 trillion and $4.45 trillion, respectively) ().

Figure 2: Revenues and Spending (in trillions of dollars), 2019

Total revenues and total spending by all three levels of government in 2019 were $6.78 trillion and $7.65 trillion, respectively, representing approximately one-third of the $21.43 trillion in 2019 GDP ().^[1] One notable difference between the two pairs of government finance numbers is that — in contrast with the federal government — most state and local governments have laws that require them to balance their budgets and prevent them from running deficits. Because of this and given the strong state of the economy just prior to COVID in 2019, the state and local government sector ran a modest surplus (in accounting terms on an annual basis), while the federal government ran an almost $1 trillion deficit that year.^[2]

Florida and New York differ significantly with respect to the overall size of their state and local government sector. As shown in Figure 3 below, New York’s state and local governments spent $19,288 per state resident in 2019, while Florida’s spent less than half that amount at $9,267 per resident. The revenue figures were similar at $19,759 and $9,313, respectively. This figure includes the corresponding amounts for California and Texas, the nation’s two most populous states. As Figure 3 shows, the differences between Florida and New York are even larger than the California-Texas divide highlighted in SIEPR’s September 2021 policy brief (Duggan and Olmstead, 2021).

Figure 3: Revenues and Expenditures Per Capita, 2019

Measured in this way, state and local governments in the Empire State were in the aggregate more than twice as large as in the Sunshine State. It is also noteworthy that the per-capita New York revenues and expenditures are significantly higher than the national average of about $12,400, while the Florida amounts are much lower, consistent with the conventional wisdom that New York’s state and local governments are overall more interventionist than the average while the opposite is true for Florida. 

Part of this difference between Florida and New York, however, is driven by differences between the two states in per-capita income, which was about 26 percent higher in New York than in Florida in 2019. But even after adjusting for this, state and local governments loom much larger in New York, with their per-capita spending representing 27 percent of per-capita income versus just 16 percent in Florida. In the sections that follow, we discuss the drivers of this difference but begin with a comparison of state and local revenues in the two states. 

Where does the money come from?

Taxes are the largest source of revenue for Florida’s and New York’s state and local governments, although the composition of this tax revenue differs significantly between the two states. As Appendix Table 1 shows, state and local tax revenue per capita in New York was $9,866 per state resident versus just $3,984 in Florida. This difference is primarily driven by individual income taxes — which stood at $3,192 per capita in New York but zero in Florida, which is reflected in Figure 4 below. 

Figure 4: FL vs. NY Revenues per State Resident, 2019

The main reason behind New York’s larger tax coffers is simple: The Empire State has relatively high tax rates, including the country’s second-highest top marginal individual income tax rate at 10.9 percent (second only to California’s 13.3 percent). Florida, on the other hand, is one of just eight states with no individual income tax (). Recent accounts suggest that this difference may have become much more salient for individuals and families (especially those with high incomes and thus with high tax rates in states such as New York and California) following the 2017 Tax Cuts and Jobs Act (TCJA), which greatly limited the deductibility of state and local income taxes (). 

New York also had substantially higher property tax revenues than Florida in 2019 ($3,150 versus $1,439 per capita). But this difference is to a large extent driven by New York’s higher average house values ($487,000 versus $282,000 in Florida). Figure 5 below contrasts the distribution of home values in these states. As this figure shows, there are three times more houses in New York with values above $750,000 than less than $100,000. In contrast, in Florida there are almost five times more houses valued at less than $100,000 than with values above $750,000 (). 

Figure 5: Percent of Total Housing Units in Housing Value Range, 2019

As Figure 4 above shows, average state and local sales tax revenues per capita are about 20 percent higher in New York ($2,459 in New York versus $2,037 in Florida), which is entirely explained by New York’s higher average state and local sales tax rate, which is also 20 percent higher at 8.5 percent and 7.1 percent, respectively ().

Money from the federal government represents another important source of income for both states, accounting for about one-sixth of revenues in Florida and one-fifth in New York. These revenues are mainly federal matching funds for each state’s Medicaid program, which provides health insurance for low-income people (explained in more detail below). The much greater per-capita federal revenues in New York are partially driven by that state’s much larger Medicaid program, which according to data from the U.S. Centers on Medicare and Medicaid Services (CMS) enrolled 6.1 million people in mid-2019 versus just 3.8 million in Florida (). The difference in Medicaid enrollment between the two states increased in 2014 when New York expanded its Medicaid program under the Affordable Care Act, while Florida did not (Duggan et al., 2019).

Another striking difference between the two states’ revenue sources is in their pension systems, which include both public employee contributions and market earnings. New York’s revenues are almost three times as high as in Florida ($2,105 per resident versus $775). This disparity is likely driven by a combination of four factors:

• A larger share of residents who currently hold government jobs (12.6 percent in New York versus 9.9 percent in Florida) ().
• A larger share of state and local workers in the state’s pension system ().
• Greater assets in New York’s pension funds ().
• Relatively more generous pensions in New York that require higher contributions ().

Receipts for government services such as tuition, room, and board at public universities; payments to public hospitals; and vehicle registration are quite comparable between the two states ($1,753 per resident in New York versus $1,603 in Florida). This similarity is to some extent surprising given that New York’s revenues are so much greater than Florida’s in every other revenue category. One reason for this is that the state government plays a much larger role in higher education in Florida than in New York. More specifically, while 74 percent of Florida’s college and university students attend a public institution, just 55 percent of New York’s do ().

Taken together, the states’ differences in income and property taxes, federal payments, and public pensions explain 81 percent (31 percent, 16 percent, 21 percent, and 13 percent, respectively) of the $10,446 difference in 2019 per-resident state and local revenues between New York and Florida.

Where does the money go?

State and local governments in New York and Florida spent $375 billion and $199 billion, respectively, in the 2019 fiscal year, which represented $19,288 and $9,267 per resident. As shown in Figure 6 and Appendix Table 2, education represented the largest area of spending for Florida and the second largest for New York. New York’s overall education spending per capita was more than twice as high as Florida’s ($4,759 versus $2,229). This difference is comparable to the difference in overall spending (New York spent 114 percent more on education and 108 percent more overall than Florida). In both states, the vast majority of that spending was driven by K-12 education with virtually all the rest going to higher education, which includes two- and four-year colleges and universities. 

Figure 6: FL vs. NY Expenditures per State Resident, 2019

The largest category of state and local spending in New York in 2019 and the second highest in Florida was social services and safety-net programs, which mainly represent spending on Medicaid. As shown in Figure 6, New York’s spending is much higher, at $5,397 per resident versus $2,181 in Florida. This large difference is not surprising since 32 percent of New Yorkers were insured through Medicaid in 2019 whereas in Florida just 18 percent were ().

The pattern of higher spending in New York is repeated for most other categories of state and local services. It is especially striking for public transit, where New York’s state and local spending is 11 times higher on a per-capita basis than in Florida ($1,139 versus $98). In contrast, spending is quite similar between the two states on public safety ($1,124 and $915), which includes police, fire, prisons, and jails. 

Taken together, this overview of state and local spending in America’s third- and fourth-most populous states reveals stark differences for most categories of spending with New York substantially higher. But let’s examine whether higher spending translates into better outcomes — with the caveat that there are of course many variables beyond state and local government policy that influence these factors. 

Metrics of economic performance

One frequent measure of the economic health or influence of a city or state in the U.S. is its rate of population growth. For decades, the population of Florida has grown much more rapidly than the national average, while the corresponding growth rate in New York has lagged as shown in Figure 1.

These divergent trends were driven to a significant extent by migration into Florida from other states and migration out of New York to other states. As displayed in Figure 7, in all but two years from 2001 to 2021, more individuals were moving into Florida from other states than moving out. In contrast in each of those 21 years, more individuals were leaving the Empire State than there were moving in. These differences were especially striking in 2021 when 221,000 U.S. residents migrated to Florida versus 352,000 New Yorkers moving from that state. While these numbers were almost surely driven higher by the pandemic, the patterns were generally similar in 2019 prior to COVID, with a net 139,000 people moving into Florida from other states and a net 184,000 leaving New York.

Figure 7: Net Domestic Migration into FL vs. NY, 2001-2021

Research summarized in a recent article by Henrik Kleven and co-authors strongly suggests that high state and local taxes can lead to more migration out of a state and/or less migration into a state (). Recent changes in federal tax policy provide something of a “natural experiment.” More specifically, in 2017 and before, New York’s 10.9 percent top marginal tax rate was effectively 6.5 percent for high-income taxpayers (about 60 percent of the total due to the previous deductibility of state income taxes and an approximately 40 percent to federal income tax rate) but this changed immediately to 10.9 percent in 2018 due to the TCJA.

There is, however, and as shown in Figure 7, little evidence of a significant increase in out-migration from New York in the subsequent three years. The substantial increase in migration out of New York in 2021 was more likely driven by the pandemic, though more research with individual-level data is surely needed regarding this issue to definitively answer this.

In light of these migration trends during the past two decades, one might expect other measures of economic performance to show Florida as a rising force and New York as a receding one. However, as shown in Table 1 below, New York’s growth in per-capita income (PCI) during the past decade or two was similar to Florida’s and to the U.S. as a whole (). In fact, from 2010 to 2021 there was an identical growth rate in PCI in Florida, New York, and the U.S. as a whole (26 percent in all three cases).

Table 1: Per Capita Income in Florida and New York from 2000 to 2021 (inflation-adjusted to 2021 dollars)

Source: 

Of course, changes in per-capita income alone do not capture how the distribution of income is changing over time. For example, an area’s PCI could soar with little improvement for the most disadvantaged. However, the data displayed in Table 2 show that the fraction of the population with family incomes below the federal poverty line evolved similarly in Florida, New York, and the U.S. during the past two decades (). And in 2020, approximately 1-in-8 Floridians and 1-in-8 New Yorkers had family incomes below the poverty line, which is similar to the national average.

Table 2: Poverty Rates in Florida and New York from 1999 to 2020

Source:

Depending on the metric that one uses, both Florida and New York have something to celebrate in recent years. The population of Florida is growing much more rapidly than in the U.S. as a whole, and the state is therefore enjoying increasing influence economically and politically. On the other hand, per- capita incomes remain much higher in New York than in either Florida or in the U.S. overall. And by arguably the most common metric of economic well-being among the disadvantaged (the poverty rate), both states are performing similarly to the rest of the U.S.

Metrics of government performance

Government policy influences educational attainment, health status, crime, housing security, and many other measures of well-being. For example, government policy can reduce the student-teacher ratio in public school classrooms, increase Medicaid reimbursement to physicians, revise subsidies for affordable housing development, or change the number of police on the streets.

Of course, policy levers are not the only determinants of these metrics. A large body of research in economics and other social sciences strives to disentangle the causal effect of specific policies, so that lawmakers and others have the best possible evidence when making decisions. Unfortunately, empirical evidence often loses out to politics and other factors in deciding which policies are implemented, which ones stay in place, and which ones are rescinded.

In this section, we examine how Florida and New York measure up when it comes to health, homelessness, education, and crime. This treatment is not meant to be exhaustive — as it excludes, for example, air pollution and the quality of infrastructure — but simply to shine the light on several metrics that should represent important priorities to policymakers and their constituents now and in the future. 

Health policy differences: The case of Medicaid

Nearly one-in-three (32 percent) New Yorkers obtained their health insurance through the state’s Medicaid program in 2019. The corresponding fraction in Florida was much lower at 18 percent, even though a similar fraction of the two states’ residents live in poverty (). One reason for this difference is that New York expanded its Medicaid program in 2014 as called for in the Affordable Care Act (ACA), which significantly increased both Medicaid enrollment and health insurance coverage (). Florida is one of 12 states that have still not expanded its Medicaid program following the passage of the ACA.

As the first row of Table 3 shows, the fraction of Floridians without health insurance in 2019 was more than twice as large as the corresponding share of New Yorkers (13.2 percent versus 5.2 percent) (). Consistent with this, Florida ranked 48th among all 50 states (and the District of Columbia) with respect to the share of its residents who were insured, while New York ranked 8th.

Table 3: Health Insurance and Health Outcomes in 2019

Source: , ,

Recent research has demonstrated that ACA-induced expansions in health insurance coverage reduced mortality in the U.S. (). The different policy choices by Florida and New York about whether to expand Medicaid are generally symptomatic of different underlying attitudes toward public health assistance. These differences may contribute to the lower infant mortality rate in New York (3.9 per 1,000) than in Florida (5.5) (). In contrast, life expectancy at birth in the two states is almost identical (77.7 in New York versus 77.5 in Florida) ().

Housing and homelessness in California and Florida

As shown above, in Figure 5, housing values are significantly higher in New York than in Florida. One contributor to this difference has been the less burdensome regulations, such as zoning in Florida (). Consistent with this, data from the U.S. Census Bureau indicate that Florida had 53 percent more building permits than New York in 2020 (163,000 versus 106,000) (). High prices and low supply contribute to the much lower rate of home ownership in New York (53.6 percent) than in Florida (68.7 percent) ().

Table 4: Housing and Homelessness

Source: ,

High rents and housing prices represent one of many factors — including declining mental health — that have contributed to high and rising rates of homelessness in New York. The fraction of residents who are homeless is higher in New York (469 per 100,000 residents in 2020) than in any other state. In contrast, the share of Floridians who are homeless (128 per 100,000) is much lower than the national average of 177 per 100,000 residents. These differences have increased significantly over time. More specifically and as shown in Table 4, the number of homeless per 100,000 residents fell by more than 50 percent in Florida from 2007 to 2020 (from 263 to 128), while it increased by 45 percent in New York during that same period (from 324 to 469) (). 

Education inputs and outcomes: The case of K-12

As demonstrated above, K-12 education accounts for a large fraction of state and local spending in Florida and New York. This is not surprising, since both states had a combined 5.4 million students in public elementary and secondary schools in Fall 2021 (). With respect to spending per K-12 student and as shown in Table 5, New York’s level of $25,853 in 2018-19 was almost twice as large as the national average of $13,701 in that same year, while spending in Florida was much lower at $10,376 (). This disparity is partially driven by higher average K-12 teacher salaries in New York than in Florida ($87,738 versus $49,583, versus $65,090 nationally, in 2020-21) (). New York also has one of the lowest student-teacher ratios of any state at 12.4 while this ratio in Florida is much higher at 17.2 (versus a national average of 15.9 in 2019) ().

Table 5: Education Differences

Source:

Whether and to what extent higher salaries for teachers, lower student-teacher ratios, or other increases in K-12 resources lead to better outcomes for students is the subject of voluminous literature in the economics of education. With respect to high school graduation rates, which is no doubt a very incomplete measure of the quality of a K-12 system, Florida fares better at 87 percent relative to New York’s 83 percent according to the most recent data from the U.S. Department of Education for the 2018-19 academic year ().

These disparities in graduation rates are especially large for under-represented minority groups. The high school graduation rate for Black students in Florida was 82 percent compared to 74 percent in New York. An even larger gap exists for Hispanic residents in each state, with rates of 86 percent and 73 percent in the Sunshine and Empire states, respectively. Similarly, while the graduation rate was 75 percent for Florida high schoolers with limited English proficiency, the rate was only 34 percent in New York. Therefore, on this metric, Florida’s government outperforms New York’s despite the Sunshine State’s much lower per-pupil expenditures.

With respect to standardized test scores, the two states are in many respects similar. For example and as shown in Table 5, the average national math and reading scores in 2019 among 8th graders in New York were 280 and 262 versus an almost identical 279 and 263 in Florida (). Perhaps the most striking difference between the two states is on standardized tests for college admissions, with New York’s average SAT and ACT scores of 1057 and 26.3 significantly higher than Florida’s corresponding averages of 993 and 20.4. Of course, not all students take college admissions tests, and so the NAEP scores among 8th graders and other K-12 students are arguably a more comprehensive measure.

Crime and incarceration

In 2019 and as shown in Table 6, violent crime (murder, robbery, assault, and rape) rates in Florida and New York were similar, with New York about 5 percent lower at 358.6 violent crimes per 100,000 residents versus Florida’s 378.4 rate. In contrast, New York’s property crime rate was 36 percent lower than Florida’s (1,373.3 and 2,145.7, respectively). However, when considering this data, it is important to account for the fact that many crimes are under-reported. Homicides, which rarely go unreported, are 44 percent lower in New York (2.9 per 100,000) than in Florida (5.2), whose homicide rate is slightly above the national average rate of 5 per 100,000. Taken together, this data strongly suggests that crime is much more common in Florida than in New York ().

Table 6: Crime and Incarceration in 2019

Source: ,

Previous research suggests that more police on the streets leads to reductions in crime (). Consistent with most other areas of economic activity, New York spends more per resident on police than Florida ($552 versus $438). This difference suggests that New York’s higher spending on police contributes to the state’s lower crime rate. 

Another potentially important driver of criminal activity is the incarceration rate, which at the national level has fallen significantly during the past decade. Perhaps not surprisingly given its much higher crime rates, Florida’s incarceration rate in 2019 was more than twice that of New York’s (870 versus 420 per 100,000 adults) (). Despite this difference, New York actually spends more per state resident on incarceration than does Florida ($331 versus $223), with this difference potentially driven by higher salaries or more personnel per inmate in state prisons and local jails.

Conclusion

Florida and New York both have much to celebrate in recent years but also multiple fronts on which improvement is needed. The Sunshine State has continued to experience a significant population boom and is consequently enjoying much greater political power. The Empire State’s per-capita income has remained substantially higher than Florida’s or the national average despite large net migration out of the state every year since 2000.

With respect to other measures of well-being that can be affected by government policy, New York scores well due to its high health insurance coverage and low rates of both crime and incarceration relative to Florida and the rest of the U.S. However, an area of concern is that New York has a very high rate of homelessness and low high school graduation rates. In contrast, Florida has low health insurance coverage and high incarceration but low homelessness and relatively high school graduation rates. 

The data summarized in this policy brief focused primarily on 2019, the year prior to the onset of the pandemic in March 2020. Many things have changed in America’s third- and fourth-most populous states since then. Both states have suffered higher COVID-related death rates than national averages. Despite pursuing very different lockdown, vaccine, and masking policies since March 2020, the cumulative COVID mortality rates are almost identical in Florida and New York at 375 and 372 per 100,000 residents, respectively (). And the economic recovery since Spring 2020 has proceeded at different rates in the two states. As 
of August 2022, New York’s unemployment rate of 4.7 percent is higher than any other state while Florida’s rate of 2.7 percent is one of the nation’s lowest ().

Is New York’s big government approach better or worse than Florida’s limited government approach? Recent developments and data give ammunition to both sides of this debate. We hope that empirical evidence will increasingly inform those debates and subsequent policy decisions, as each state confronts the challenges of a steadily aging population, an increasingly polarized electorate, and a generation of schoolchildren, workers, and others who have been adversely affected by the pandemic and the associated disruptions. 

Mark Duggan is the Trione Director of SIEPR and the Wayne and Jodi Cooperman Professor of Economics. His research focuses on the health care sector and the effects of government expenditure programs. He served from 2009 to 2010 as the Senior Economist for Health Care Policy at the White House Council of Economic Advisers and was the 2010 recipient of the ASHEcon Medal.

Emma Hou is a SIEPR Research Assistant. She is a senior majoring in economics and is interested in finance and health economics along with the impact of government policies and programs.

References 

Biggs, Andrew.  2015. American Enterprise Institute.

Chalfin, Aaron, Benjamin Hansen, Emily Weisburst, and Morgan Williams, Jr. “Police Force Size and Civilian Race.” 2022. American Economic Review: Insights, 4:2, 139-158. 

Duggan, Mark, Gopi Shah Goda, and Emilie Jackson. 2019. National Tax Journal, 72:2, 261-322.

Duggan, Mark, and Sheila Olmstead. 2021. SIEPR Policy Brief. September.

Hsieh, Chang-Tai, and Enrico Moretti. 2019. American Economic Journal: Macroeconomics, 11(2): 1-39.

Kleven, Henrik, Camille Landais, Mathilde Munoz, and Stefanie Stantcheva. 2020. Journal of Economic Perspectives, 34(2): 119-142.

Miller, Sarah, Norman Johnson, and Laura R. Wherry. 2021. Quarterly Journal of Economics 136:3, 1783-1829. 

Appendix

Appendix Table 1: State and Local Revenues per Capita by Source in 2019 in Florida and New York

Appendix Table 2: State and Local Expenditures per Capita by Source in 2019 in Florida and New York

^[1] To avoid “double counting” we subtract $762 billion from the sum of federal, state, and local spending and revenues in 2019, as this represents transfers from the federal government to state and local governments.

^[2] Governments also loom large in the U.S. labor market, with 2.8 million federal workers, 5.2 million state workers, and 14.6 million local government workers in July 2019 (). Taken together, government employment accounted for 14.9 percent of all U.S. employment at that time.