Relocations spur change in fortunes of US states

The shifting economic situations of the four largest US states by population — California, Texas, Florida and New York — also mirror the political gap in the country.

New York and California saw the steepest drops in tax revenue this fiscal year, while Florida and Texas padded their wallets, largely thanks to COVID-19 pandemic-fueled migration, according to a recent report.

Relocations can have a major impact on state revenue because New York, with Wall Street, and California, home to Silicon Valley, have some of the highest earners in the country.

New York and California saw their populations fall by nearly 300,000 each in the fiscal year ending in June 2022 — while Florida and Texas, which have no state income taxes, added 888,000 people collectively, according to US Census Bureau data.

The population gains and losses among the four states were even more significant going back to April 2020.

Different approaches to the pandemic, such as whether schools and restaurants should have remained open, were factors in the relocations, along with the cost of living.

There also have been political skirmishes among the four states.

In the past year, Texas Governor Greg Abbott and Florida Governor Ron DeSantis have sent migrants who entered the US at the border with Mexico to "sanctuary" locations, such as New York City and Chicago, and famously in 2022, to affluent Martha's Vineyard in Massachusetts.

In New York and California, the Democratic Party has long been dominant while Republicans run Florida and Texas.

DeSantis is seeking the 2024 Republican presidential nomination, while California Governor Gavin Newsom is regularly mentioned as a potential Democratic presidential candidate, although he maintains he is not running.

The two governors, whose states sit on opposite coasts, also have sharply criticized each other's policies, for example, on abortion access.

Newsom has called DeSantis a "sixth-grade bully".

"California continues to be the dominant economic engine," he said in a Fox News interview last month, adding he would be willing to debate DeSantis.

DeSantis has called Newsom's focus on Florida "bizarre" and recently visited San Francisco to highlight the city's crime and drug problems. He filmed a video saying the "once great city" has collapsed due to leftist policies.

Taxpayer exodus

New York State, which had some of the strictest regulations, has seen a taxpayer exodus to low-tax locations as its revenue is down nearly 20 percent, according to Bloomberg News.

Texas, meanwhile, reported 12.2 percent growth in tax revenue, while Florida has brought in 9.9 percent more, according to data compiled by the Urban-Brookings Tax Policy Center in Washington, DC.

In Texas, the windfall has resulted in a record $33 billion surplus, leading Abbott to propose tax cuts.

Recent data from the Internal Revenue Service shows that New York and California combined lost more than $90 billion in adjusted gross income of residents during the pandemic.

Also, for the first time, six rapidly growing states in the South — Florida, Texas, Georgia, North Carolina, South Carolina and Tennessee — are contributing more to US GDP than the Northeast, home to the long-dominant Washington-New York-Boston corridor, according to Bloomberg.

The Southeast accounted for more than two-thirds of all job growth across the US since early 2020, almost doubling its pre-pandemic number. It also has 10 of the 15 fastest-growing large cities in the US, according to Bloomberg.