Report: Hochul receives failing grade on fiscal restraint
(The Center Square) — New York’s Democratic Gov. Kathy Hochul received a failing grade on fiscal restraint from a libertarian think-tank, which criticized her for supporting higher taxes and government spending.
The Cato Institute’s 2024 fiscal report card on U.S. governors gave Hochul an “F” grade. It ticked off a long list of tax increases that have driven up costs for average New Yorkers since she took office in 2021 to replace then-Gov. Andrew Cuomo, who resigned amid sexual harassment claims.
The report credited Hochul with accelerating previously enacted income tax cuts in 2022 and, a year later, approving a six-month suspension of the gas tax, but it said those have been overshadowed by other tax and spending increases under her watch.
“Hochul has approved some tax cuts, but they have been narrow special-interest breaks,” the report’s authors said. “New York’s budget in 2022, for example, included breaks for such things as child care, digital gaming, heating oil conversion, theatre productions, electric vehicles, and farmers. New York hands out $700 million a year in film tax breaks.”
That included a significant increase in an MTA payroll tax, extending a capital base tax and an increase in the top corporate tax rate from 6.5% to 7.25% through 2026, and increasing the state’s cigarette taxes.
“A far larger cost to New Yorkers will be imposed by Hochul’s ‘cap and invest’ program, which is supposed to counter climate change,” the report’s authors wrote. “The program, which is scheduled to begin operation in 2025, will raise $2 billion or more its first year in operation and increasing amounts after that from the auctioning of emissions allowances.These costs will ultimately land on every New Yorker.”
The report’s authors said the tax increases will “speed the exodus of New Yorkers to lower-tax states” and pointed to Internal Revenue Service data showing New York lost a net 108,000 households to other states in 2022.
“Most troubling for New York’s economy is that high earners are leaving in droves and taking their wealth and skills with them,” the report noted. “The IRS data show that about two high earners have been moving out of the state for each one moving in.”
The Cato Institute grades governors in their annual report on their tax and spending records. Those who have cut taxes and spending receive higher grades, while those who have increased taxes and spending get lower marks. The report also considers trends in school choice, business subsidies and government debt.
Only six governors — all Republicans — were given “A” grades in the report, including Kim Reynolds of Iowa, Jim Justice of West Virginia and Sarah Huckabee Sanders of Arkansas, according to the group.
“These governors have led the largest wave of state tax-cutting in decades,” the authors wrote. “Half of the states have cut individual or corporate income tax rates in recent years.”
Maine’s Democratic Gov. Janet Mills joined Hochul as one of the six governors to receive an “F” grade and scored poorly on spending, which the group attributed to her support for “large budget increases” and an expansion of Medicaid spending. The group pointed out that Mills’ predecessor, Republican Gov. Paul LePage, received an “A” grade for his fiscal restraint.
