The CATO Institute, a Libertarian think tank, issued its 2024 fiscal report card on United States Governors and gave New York’s Governor Kathy Hochul an “F” rating. The report lists a laundry list of tax increases that have escalated costs for New Yorkers since Hochul came to office in 2021.
Hochul is not alone on the “F” report card. Five other governors, all Democrats, also received an “F” grade - Tony Evers of Wisconsin, John Carney of Delaware, Jay Inslee of Washington, Janet Mills of Maine, and Tim Walz of Minnesota.
Gov. Walz, now running with Kamala Harris for the White House, scored the lowest rating of all 50 governors, dead last, with only 19 out of 100 points. Hochul is the second worst scoring governor in the nation with just 29 out of 100 points.
Six other governors, all Republicans, received a grade of A: Kim Reynolds of Iowa, Jim Pillen of Nebraska, Jim Justice of West Virginia, Sarah Huckabee Sanders of Arkansas, Kristi Noem of South Dakota, and Greg Gianforte of Montana.
This report grades governors on their fiscal policies from a limited-government perspective. Governors receiving an A have cut taxes and spending the most. Governors receiving an F have increased taxes and spending the most. Low grades are all about taxes, taxes, taxes.
The grading mechanism is based on seven variables: two spending variables, one revenue variable, and four tax-rate variables. Cato’s state fiscal report has used the same methodology since 2008 making their ratings one of the most consistent available.
Where did Hochul fall flat according to the CATO ranking?
In the spending category, Hochul approved the acceleration of previously enacted income tax cuts that cost the state’s bottom line. She claimed there were $1.2 billion in tax cuts, but the savings for typical families were small. Hochul also approved the suspension of the gas tax for six months in 2022. Tax cuts are popular with many taxpayers, but they do come at a cost to the state budget that relies on those revenues.
CATO says that in 2023, Hochul switched from expensive tax cuts to tax hikes.
“From a tax perspective, New York is a lousy place to do business, and Hochul has made it worse.” She increased the top corporate tax rate from 6.5 percent to 7.25 percent through 2026. These changes raised taxes about $1.2 billion a year. New York ranks second to last among the 50 states on the Tax Foundation’s State Business Tax Climate Index.
“She also approved a large increase in a payroll tax called the Metropolitan Transportation Mobility Tax increasing the top rate of the tax from 0.34 percent to 0.60 percent of wages for workers in New York City. The hike drains another $1 billion a year from taxpayers to fund the Metropolitan Transit Authority (MTA),” say the CATO report.
NY has the highest cigarette tax rate in the nation and Hochul hiked the cigarette tax even further from $4.35 to $5.35 per pack raising about $200 million a year. CATO points to this high tax rate incentivizing substantial black-market activity and criminal activity.
New York’s Green New Deal also imposes massive costs on New Yorkers. Hochul’s “cap and invest” program, which is supposed to counter climate change, is incredibly expensive. These costs will land in the pockets of every New Yorker.
All these tax increases will speed the exodus of New Yorkers to lower-tax states. A Marist poll found that 37 percent of New Yorkers say they are planning to leave the state. IRS data show that New York lost a net 108,000 households to other states in 2022. CATO says, “Most troubling for New York’s economy is that high earners are leaving in droves and taking their wealth and skills with them.”
CATO concludes their assessment of Hochul by saying, “The exodus will continue as long as New York’s government remains highly inefficient. New York has two million fewer residents than Florida, but its total state and local government spending is 81 percent higher than Florida’s.”