In compiling the report, the Comptroller noted that New York relies so heavily on Wall Street for tax revenues that the state "may require federal assistance" to plug the projected budget gaps

"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 says. "This year is on pace to be one of the worst years ever on Wall Street. Through the first half of this year, broker dealer operations of New York Stock Exchange member firms reported a loss of nearly $21 billion."

Over the past year, the securities industry in New York City has lost 16,300 jobs. DiNapoli predicts the industry could lose a total of 38,000 by October 2009 and another 10,000 jobs could be lost in banking, insurance and real estate. The Comptroller estimates total private sector job losses could reach 175,000 in New York City but losses could be greater if the economic downturn is deeper and longer than currently forecast. In total, New York State could lose 225,000 jobs during this period.

DiNapoli also fears the ripple effect to other service industries as bonus pool payments are scaled back. In the early 2000s, bonuses fell by 50% over a two-year period in the years following the bursting of the dot-com bubble and the events of 11 September, 2001. According to the Comptroller, recent developments suggest that a decline of a similar or even greater magnitude could occur this time.

"Top Wall Street executives ought to forego bonuses during this difficult time; it's inappropriate to reward poor performance," DiNapoli says. "But the public must keep in mind that bonuses paid to lower level employees are often used to purchase goods and services in other industries, which benefits the overall economy. New York will feel a lot pain from a shrunken bonus pool."

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