A record year of Wall Street profits and large bonuses will boost New York’s tax revenue but won’t erase the state’s fiscal problems, Comptroller Thomas DiNapoli warned yesterday.
Cash bonuses paid to securities professionals for 2009 are projected to reach $20.3 billion, a 17% increase over 2008 as Wall Street profits are forecast to hit a record $55 billion.
“There is some good news here,” DiNapoli said in a phone conference with reporters yesterday. “The challenge is that this is just one slice of the revenue stream coming into the state and we still see tremendous weaknesses in other parts of our revenue.”
The higher bonuses combined with a temporary state tax increase on higher earners will bring the state an additional $600 million, DiNapoli said.
The projected bonus pool includes cash bonuses and deferred compensation for which recipients have paid taxes in advance.
With more firms paying out bonuses in stocks and deferred compensation, it is unclear how the 2009 bonus pool could benefit the state coffers in coming years.
“We’re looking at the numbers as they’re coming in now,” DiNapoli said. “It’s hard for us to calculate [future revenue] and obviously depending on the time frame there could very well be a benefit from that down the road.”
Bonuses over the past decade have swung from a low of $9.8 billion in 2002 to a high $34.3 billion in 2006, averaging $20.73 billion during the past 10 years, according to data from the comptroller’s office. The state gets about 20% of its tax revenue from the financial services industry.
The bonus report comes the day after DiNapoli released a report stating that 2009 statewide sales tax collections decreased by 5.9% compared to 2008, one of the sharpest declines on record.
The comptroller also warned on Monday that Gov. David Paterson’s revenue estimates for the current fiscal year rely on some $750 million in revenue that may not materialize as expected. Those sources include a $300 million fee paid by the operator of video lottery terminals at Aqueduct Racetrack, a $200 million transfer of funds from the Battery Park City Authority, and a $250 million tax amnesty program.