New York Dems seek to withhold federal taxes over funding cuts

If the comptroller's office finds the federal government withheld funds against court orders, the governor, comptroller, and budget director could withhold that amount from payments to the federal government, according to the proposal, dubbed the Reciprocal Enforcement of Claims On Unpaid or Reduced State Entitlements, or RECOURSE Act.

"In the event that the Federal government withholds funds the state is owed, and does so in contravention of a court decision, the state would be authorized to respond by withholding funds due to the federal government," the bill reads.  "This would be both a deterrent to such unlawful acts by the Trump Administration and would give the state possession of funds that could provide material leverage in a legal clash with the federal government." 

The measure would target federal tax withholdings from New York workers' paychecks, which the state collects and sends to the federal government.

Lasher said the legislation would "be a powerful lever to withhold money from the Trump administration" if it defies federal court orders requiring it to release funding to the state.

"As Trump continues to take aim at New York, we must use every tool in our toolbox to fight back," the Democrat said in a statement on social media. 

New York collected $361.8 billion in federal taxes and received $383 million in federal spending in fiscal year 2022, according to State Comptroller Tom DiNapoli's office. That's a shift prior to the COVID-19 pandemic when the state generally sent more money to Washington, D.C. than it received in federal funding. 

President Donald Trump has targeted his former state with federal funding cuts in response to Democrats' pushback over immigration crackdowns, a rollback of transgender protections and other divisive White House policies. 

In the past month, the Trump administration has withheld $18 billion in congressionally approved infrastructure funding for the Hudson tunnel and Second Avenue subway and $34 million in counterterrorism dollars for the Metropolitan Transportation Authority. Both moves are being challenged in federal court. 

Trump has also taken aim at New York over its role in the ongoing federal government shutdown. The top two Democrats opposing the temporary spending bill to reopen the federal government, Senate Minority Leader Chuck Schumer and House Minority Leader Hakeem Jeffries, are New York lawmakers. Both men have balked at ending the impasse.

Legislators in several other Democratic led states, including Connecticut, Maryland and Wisconsin, have filed similar proposals to withhold federal taxes in response to the Trump administration's actions. None have been signed into law.