ALBANY, New York (Reuters) - Wall Street bankers and brokers likely stand to see their bonuses fall by 5.5 percent and include a greater percentage of stock than in prior years, New York state’s budget chief said on Thursday.
Budget director Laura Anglin, in a forecast for payouts made in December and this month, said bonuses will likely now be paid in 40 percent cash and 60 percent stock, instead of equal amounts of cash and stock.
New York closely tracks the financial sector’s profits because Wall Street firms account for about a fifth of its tax revenues.
Also on Thursday, Comptroller Thomas DiNapoli estimated that New York City’s financial industry paid $33.2 billion in bonuses last year, down 2 percent from the 2006 record of $33.9 billion. The average bonus fell 4.7 percent to $180,420, partly because the sector added 9,600 jobs in the first 11 months.
The multibillion-dollar losses posted by the major Wall Street investment banks are forcing Democratic Gov. Eliot Spitzer to clip his revenue forecasts by $500 million in the current budget that ends on April 30, Anglin told reporters.
“We are very nervous,” she said, when asked about the possibility that revenues might recover this spring.
The new budget Spitzer is due to release on Tuesday will be based on forecasts for a $700 million drop in revenues, though spending cuts will help keep the deficit from growing more than $100 million to $4.4 billion, she added.
Of the spending cuts, Anglin said, “That’s a mix of efficiency in action, agencies controlling spending, Medicaid spending just coming in less than we originally forecasted.”
The shift toward rewarding Wall Street workers with more stock than cash also hurts the state’s revenues because it cannot tax stock option awards until they are exercised, Anglin noted.
Spitzer has said spending should rise by the same amount that New Yorkers’ personal incomes increase -- 5.3 percent -- but Anglin declined to say whether the new budget will include such a big increase. Fiscal monitors prefer that spending hikes do not top the inflation rate, which until recently was about 3 percent.
The latest employment rates also showed both the state and city economies weakened in December. New York City’s jobless rate rose three-tenths of a percentage point to 5.4 percent, a full percentage point above the year-ago level.
For New York state, the rate also rose three-tenths of a percentage point, hitting 4.9 percent. That was eighth-tenths of a percentage point above the rate in December 2006.
Reporting by Elizabeth Flood Morrow in Albany; Additional reporting by Joan Gralla in New York; Editing by Leslie Adler
Our Standards: The Thomson Reuters Trust Principles.