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October 30, 1998 

Citing PPI study, Moynihan says high taxes, unbalanced federal aid hurt NY

A state government that for years was both "expansive" and "expensive," and a continuing imbalance of tax dollars sent to Washington compared to aid received, have helped keep New York's economy trailing the nation's, according to U.S. Senator Daniel Patrick Moynihan.

In this year's edition of his annual look at the federal budget and the states, Senator Moynihan recalled the "vibrant and growing regions" of upstate New York when he began his career in politics in the mid-1950s.

From the late 1950s through the 1960s, the Senator said, New York had "the most extraordinary job growth in our history, but it was in the public, not private, sector."

"The problem with an expansive state government is that is expensive, too," Senator Moynihan noted. "Taxes rose and rose."

The Senator cites reports by The Public Policy Institute, the research affiliate of The Business Council, and the Buffalo News to show the long-term result of those higher taxes: While employment statewide has grown dramatically, the upstate economy continues to lag.

His comments are part of an introduction to The Federal Budget and the States: Fiscal Year 1997, compiled by analysts at the Kennedy School of Government, Harvard University.

The state's rising debt is another "threat to the state's long-term fiscal health," Senator Moynihan said.

"It may be that New York's persistent balance of payments deficit with the Federal government is responsible for some of what we are witnessing," he said.

The new report shows federal taxes collected from New Yorkers in 1997 totaled $5,124 per person, while federal spending in the state was $4,339 per capita. The state's total "balance of payments deficit" of $14billion was third-highest in the nation.