New York State residents, workers, and businesses send more than $80 billion to the state government each year. These dollars come from taxes such as those on personal income, sales, and corporate profits; charges such as university tuition and hospital payments; and fees for driver’s licenses, air emission permits, and other purposes. Along with tens of billions of dollars in federal revenues, these resources are distributed around the state to pay for education, health care, transportation, public safety, and other programs.

For decades, citizens in every region of New York have raised questions about the geographic distribution of revenues and expenditures in the state budget. Upstate residents often believe they subsidize generous social welfare programs that disproportionately benefit Downstate; New York City and suburban interests frequently quarrel over funding for education and other programs; the Capital Region generally benefits when state government expands but may suffer disproportionately during periods of budget difficulties. These disputes over resources are closely linked to political competition in which Upstate and Downstate may both have reason for concern. The majority of the state’s residents live in the metropolitan region centered in New York City, so that the Legislature inevitably has a Downstate majority; on the other hand, Upstate voters are more likely to turn out on Election Day, and thus candidates for statewide office make sure to pay tribute to the region’s concerns.

A clearer understanding of New York State’s actual fiscal policies may help reduce such longstanding tensions and lay the groundwork for more useful discussions over potential changes — an especially important undertaking when budgetary choices are increasingly difficult. As one essential starting point, this report analyzes and assesses the regional distribution of revenues and expenditures in the state’s fiscal 2009-10 budget.