Um, as you point out, there are some pretty massive tax transfers. Local government finances upstate are quite shaky. They'd go bankrupt if they were forced to do without the tax money from NYC and the suburbs that is funneled through state government grants. It's a poor region which has better services than it can afford courtesy of the wealth from downstate - what matters is net transfers, not gross ones. You won't be building anything without money from NYC region. Your social services will collapse. Note again, yes, local governments pay 50% (or rather 25 - half is federal) of Medicaid costs, but some of that comes from downstate. Nor is upstate better for the absolutely destitute than NYC - yes, you get cheaper rent, but that doesn't compensate for better NYC social services, easier access for rent regulated housing, and good public transport (cars cost money).

Given that you also seem to be complaining about high taxes and 'anti-business' regulations, it sounds like you think Upstate would be better off as a northern version of Mississippi.