What We Give vs. What We Get: Long Standing Imbalance at Crisis Point – The Time for Action is Now

Photo by lucas Favre on Unsplash
Photo by lucas Favre on Unsplash.

Long Island Tax Imbalance at Crisis Point – The Time for Action is Now

When I ran into John Cameron at the Smart Growth Summit, he told me the next meeting of the Long Island Regional Planning Council would be important. I believe I indicated that I thought they were all important — they are! He thanked me but said this was different. The topic: A carefully conducted study by PFM Group assessing the balance of what Long Island gives in tax revenue, and what it gets out.

We Pay Too Much and Receive Too Little

One of the first challenges explained to me when I became involved with folks addressing regional issues 25 years ago was that Long Island is a significant economic driver that is often overlooked in the shadow of New York City. Further, as a home to individuals of great wealth, few realize our pockets of poverty nor the struggles regular and even fairly high wage earners have making ends meet. One result is that Long Islanders as a whole have long paid far more in taxes than they receive in terms of state and federal aid.

A decade ago, the Long Island Association published a study on this. Around the same time, LIRPC member Michael White was tasked by Nassau and Suffolk Counties to publicly discuss the findings of a meta review on the burden of school taxes and how they might be remediated. Both then identified this tax burden as a major issue.

Long Island is a significant economic driver that is often overlooked in the shadow of New York City. Further, as a home to individuals of great wealth, few realize our pockets of poverty nor the struggles regular and even fairly high wage earners have making ends meet. One result is that Long Islanders as a whole have long paid far more in taxes than they receive in terms of state and federal aid.

Now, It's at a Crisis Point

The results of this latest study are shocking. It finds that in the last 10 years the deficit has grown by 65% to over $28 billion dollars. This is more than double the aggregate income growth, which was 38%. At the State level, the deficit more than doubled.

Anecdotally, it has long been known that people are leaving because taxes are too high and they can’t afford to live here. There’s literally a racy rom-com starring Jennifer Lawrence that centers on this. Overall, it states: “revenues increased substantially, while expenditures actually declined, in constant dollars.”

Conclusions include that this tax policy of neglecting Long Island  “may be a part of the reason that Long Island’s population, employment and household income rates, while still strong, have trailed the nation as a whole;” and why “personal income, employment, and population growth have lagged benchmarks.”

For decades, people have been leaving because they can’t afford to live here. In the last 10 years, the difference between Long Island pays in taxes and what it gets back has grown by 65% to over $28 billion dollars. This is more than double the aggregate income growth, which was 38%. At the State level, the deficit more than doubled.

Potential Solutions

Although researchers John Cape and Randy Bauer were clear that the study itself was limited to assessing the deficit, they recognized their findings as a long mounting emergency in need of immediate remedy. They further recognized that while means testing for State and Federal funding to provide safety nets for lower income regions is appropriate in many regards, good governance should also involve “investing in the economic engines that drive state and federal revenue,” such that those safety nets may continue to be provided. Such investments, the researchers suggested, may include:

  • Infrastructure (As one of the nation’s first suburbs, LI’s infrastructure is antiquated)
  • Economic and community development
  • Workforce housing
  • Targeted assistance to high impact sectors, as well as significant employers (i.e., incubators, training, tax incentives etc.)
  • Raising the $10,000 limit on state and local tax (SALT) deductions that “has disproportionately negatively impacted on Long Island in particular”

Although researchers John Cape and Randy Bauer were clear that the study itself was limited to assessing the deficit, they recognized their findings as a long mounting emergency in need of immediate remedy.

Notes from the Council

Member Jeff Guillot voiced shock, while also noting that, remarkably, LI’s population is still growing and the region remains attractive to high wage earners. This, he asserted, helps justify calls for increased funding as it bolsters the argument that the region is worth the investment.

Other potential investments were mentioned: Michael White noted work being done to preserve and improve water quality, and the dire need for sewers both to address pressing nitrogen pollution issues and to enable the development of walkable, transit-oriented, and otherwise more affordable housing. This is a massive systemic issue, he noted, but “we’re asking HOMEOWNERS to solve the problem.”

Bob Kennedy of Freeport discussed work they are doing locally to advance technical training and how that could use further support, empowering workers to fill potential employer needs.

Jeff Kraut added emphasis to the burden of SALT deductions on middle class homeowners.

Discussion turned to school taxes. While Long Island’s education system remains a key asset, many of our schools are deeply challenged. All could use a greater, more effective share of the 65 cents per dollar in taxes that Long Islanders pay for them. Additionally, noted Cameron, there should be greater focus on what’s being done to keep those students here once Long Island pays that much to educate them.

Despite the great wealth that does exist here, not all middle- and lower- income people have yet been driven away. This is good, because a healthy economy depends on them. Still, they need support. Just ask anyone involved in human services. Basic public services could use greater support as well, such as our police. As a region that depends on volunteer fire departments, anything we can do to make it possible for regular people to be able to afford to volunteer is important.

While Long Island’s education system remains a key asset, many of our schools are deeply challenged. All could use a greater, more effective share of the 65 cents per dollar in taxes that Long Islanders pay for them. Additionally, noted Cameron, there should be greater focus on what’s being done to keep those students here once Long Island pays that much to educate them.

The Bottom Line

As I watched the discussion, I was reminded of how, years ago, when White was working on the school tax issue, he repeatedly warned that while quality of education is a major reason why people work so hard to stay on Long Island, disparities between schools are unacceptable and taxes for all were “approaching suicide levels.”

Ironically, funding challenges led the Counties to cease outreach to educate and discuss findings with local leadership so together they could advocate for and tailor implementation of action steps that the research prescribed. At around the same time, the State wielded the machete of mandating a 2% tax cap on our schools. Not nearly enough has been done to implement solutions White was actually advocating for, and that our schools, themselves, have limited control over.  

Now, it seems, we are at the breaking point.

“If we don’t do something about this imbalance,” said Cameron, “LI will have a major challenge. It will not be sustainable for our children/grandchildren.

Long island should be speaking up. Enough is enough.”

“If we don’t do something about this imbalance,” said Cameron, “LI will have a major challenge. It will not be sustainable for our children/grandchildren.

Long island should be speaking up. Enough is enough.”

Let This be a Rallying Cry

Cameron reflected that folks involved all know that there are two major impediments to growth on LI:  

1. Lack of workforce housing  

2. Unsustainable tax burden

Still, the alarms raised by this study are enough to startle even those who have grappled with these issues for decades. 

Every industry struggles to find workers because Long Island has simply become unaffordable to much of its workforce. We may have many high wage earners, but a region cannot run on those alone. The group discussed the need to identify and advance specific policies. A summit of some sort to exchange ideas with the community and local leaders was suggested.

Over all, it was asserted that Long Island must demand accountability, making it clear that this is in the entire state and even nation’s best interest. Nassau and Suffolk Counties are major economic generators. Together, they have a larger population than Chicago and a greater GDP than 17 US states. Not only do they require adequate resources, they have a proven track record of major returns on granted capital investment.  However, this must happen quickly. The growing exodus of workers and even higher income residents clearly shows we cannot sustain the economic burden of this governmental funding imbalance.

“This isn’t just LI saying, ‘We need more money.’” Said Cameron, “There’s a problem. It’s unsustainable. We losing too much and putting our stability at risk.”

Let’s fix it.

“This isn’t just LI saying, ‘We need more money.’” Said Cameron, “There’s a problem. It’s unsustainable. We losing too much and putting our stability at risk.”

We Know What to Do. We Just Need More of Our Own Money Back

The conversation itself helped illustrate that, given the resources, Long Island is prepared. Between groups like the LI Regional Planning Council, the Long Island Association, the Long Island Community Foundation, the incredible community of Long Island leaders and stakeholders who turn out for Vision Long Island’s Smart Growth Summit, and so many others in more focused fields, Long Island is filled with well educated people who care about this region. They know what its issues and potential solutions are, better than anyone, and have been intentionally building connections among local leaders across interests and sectors for decades. 

Most of what Long Island needs is a fair share of its own resources invested back to empower such folks on the ground to thoughtfully and collaboratively implement so many solutions that have long been discussed, but perennially underfunded. It is hoped this study provides impetus to make that happen. The numbers are certainly compelling.

Related Reports

Here’s what The Long Island Regional Planning Council (LIRPC) posted on its own website: “Long Island Balance of Payments Study”

Here’s the full report: Balance of Payments Report

Here’s an Executive Summary recently sent from the council:  

“The Long Island Regional Planning Council (LIRPC) has released a Balance of Payments Study that demonstrates that Nassau and Suffolk taxpayers are sending far more money to Albany and Washington than gets returned to Long Island in the form of government spending – a combined annual deficit of more than $40 billion.  

The Study found that Long Island sent an approximate $68 billion to the federal government in the form of personal income, business, employment, estate, excise and gift taxes, while federal expenditures (excluding COVID payments) in Nassau and Suffolk were $42 billion – a deficit of $26 billion. New York State received $24.6 billion in taxes and fees from Long Island while the region received $9.8 billion in expenditures – a deficit of $14.7 billion. Additional findings from the study indicate that since 2013, annual revenue flowing from Long Island to Albany has surged by 40%, while expenditures have notably dropped by 10%. Furthermore, the gap between revenues and New York State expenditures, standing at $6.6 billion in 2013, has more than doubled, reaching $14.7 billion in 2022.

Here’s the Op-Ed it prompted LIRPC Chair John Cameron to submit for the 12/13/23 Newsday: “Fix imbalance in flow of LI taxes to state and federal governments”

Here’s what David Winzelberg wrote for 12/7/23 Long Island Business News, “Federal and state spending shortchanges LI by $40B, report says”

Those publications do have paywalls. Thank you to all who support local journalism. It’s really important!

The Island 360 published this report

Then there’s the bit in the ever witty, deeply informative Innovate LI newsletter from 12/8. ”No. 841: Powering up, following the GPS, lighting the menorah and getting stiffed by Albany, as usual”

 
Article edited 2/14/24