Cash bonuses paid to New York City employees of Wall Street firms declined 44 percent last year amid record losses in the securities industry, state Comptroller Thomas DiNapoli reported today. Financial firms disbursed $18.4 billion in 2008 compared with $32.9 billion the previous year, DiNapoli’s office calculated, basing its estimate mainly on personal income-tax collections. While the decline represents the most ever in total dollars, the bonus pool remained the sixth-largest ever, the comptroller said in a yearly report. “The federal Troubled Asset Relief Program (TARP), which infused billions of dollars into the financial system, helped prevent more institutions from failing,” DiNapoli’s office said in a news release. “TARP placed restrictions on bonuses for top executives and many have voluntarily forgone bonuses, but it did not impose limitations for lower-level employees.” The smaller bonuses will cost New York state almost $1 billion in personal income tax revenue and New York City will see about $275 million less than in 2007. Losses among financial firms based in New York City resulted in a cumulative $31.3 billion tax credit that they may carry forward to reduce tax payments to the city and state for several years, he said. In the most profitable years, high levels of compensation, corporate earnings and capital gains from Wall Street-related activity accounted for as much as 20 percent of the state’s total tax revenue and 12 percent of the city’s collections, the office has said. Average Bonus In 2008, the average bonus of $112,000 represented a 36.7 percent decline from 2007. The percentage decline in the average bonus doesn’t reflect the overall pool reduction because fewer workers shared the money as the industry shed jobs, DiNapoli said. The global financial industry has lost more than $1 trillion, mostly since the third quarter of 2007. Employment in New York City’s securities industry fell to 168,600 in December 2008 from 187,800 in October 2007, a decline of 19,200 jobs, or 10.2 percent, the report said. The state will have lost as many as 225,000 jobs and $6.5 billion in securities industry-related tax revenue by Oct. 31, DiNapoli has said. Positions eliminated in the financial industry alone may total 38,000 by then, he said. “Wall Street is the engine that drives the economies of New York state and New York City, but the global credit crunch has slowed that engine down,” DiNapoli said Nov. 24 when he released a Wall Street report. “This year is on pace to be one of the worst years ever on Wall Street.” Predicted Decline Personal income and business tax revenue from Wall Street- related activities may drop by $4.5 billion for New York state and $2 billion for New York City by 2010, the office said last month. The city’s budget gap may reach $8 billion by the July 1, 2010, start of fiscal year 2011. New York Mayor Michael Bloomberg has scheduled his annual preliminary budget presentation to the City Council for Jan. 31. The mayor is founder and majority owner of Bloomberg News parent Bloomberg LP.

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