New York City will lose nearly $1 billion in revenues because cash bonuses to Wall Street employees declined 44 percent last year, according to a report state Comptroller Thomas DiNapoli issued Wednesday.
DiNapoli estimates the securities industry paid its New York City employees $18.4 billion in bonuses for 2008, compared with nearly $33 billion in 2007.
The drop in bonuses will cost New York City $275 million, DiNapoli said.
“The securities industry has already lost tens of thousands of jobs and the industry is still continuing to write off toxic assets,” DiNapoli said in a written statement. “It's painfully obvious that 2009 will probably be another difficult year for the industry.”
He evaluated personal income tax collections and other factors, including industry revenue and expense trends.
The decline is the largest on record in dollars and the largest percentage decline in more than 30 years, but the bonus pool is still the sixth largest on record.
Before the financial crisis, business and personal income tax collections from Wall Street activities accounted for up to 20 percent of state tax revenues and 12 percent of New York City tax revenues.
The average bonus declined by 36.7 percent to $112,000 in 2008. The decline in the average bonus was smaller than the decline in the bonus pool because the pool was shared among fewer workers as the industry shed jobs.
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It's important to make sure the federal bailout packages aren't paying for corporate jets, pay dividends or executive bonuses when the economy is suffering to this extent, DiNapoli said.
“Taxpayers have invested billions of dollars to stabilize the nation's banks and financial institutions and there are plans to make additional investments to shore up the banking system,” DiNapoli said. “There needs to be greater transparency and accountability in the use of these funds. Every dime counts.”
DiNapoli also estimated that the traditional broker and dealer operations of the member firms of the New York Stock Exchange lost more than $35 billion in 2008. Industry losses were actually much greater when other business services, such as mergers and acquisitions, were factored in.
Employment in the securities industry in New York City declined from 187,800 in October 2007 to 168,600 in December 2008, a loss of 19,200 jobs.
