As NY lawmakers bust the budget, cash-cow Wall Street is moving to greener pastures

As the Legislature slouches into its second week past the April 1 deadline to pass a $233 billion or so budget for fiscal year 2025, disagreements are over non-spending issues, such as housing, and whether to add spending.

Nobody is asking: Where doe🔯s the money come from?

They should because New York’s caꦅsh cow — Wall Street — has been finding greener pastures.

The securities industry — issuing and trading stocks and bonds and providing companies advice on mergeജrs and such — has had a soft couple of years.

Nationwide pre-tax profits hit re꧑cords a few years ago, reaching $58.4 billion in 2021.

Wall Street benefited from the trillions in cash both the Trump and the Biden administrations pumped into the economܫy during the pandemic.

Low interest rates encouraged com💎pani🐷es and people to keep borrowing and investing, paying fees to Wall Street.

But as the Federal Reserve started raising rates in 2022, the profits shrunk by more than half, to $26.6 billi✨on.

They remained flat last year, reports🥃ꦰ the Securities Industry and Financial Markets Association.

As profits fell, high-paid New York workers’ bonuses fell, too.

Bonuses for 2023 were $33.8 billion in New York City, the state comptroller estimates, flat from t💯he previous year and 21% below 2021’s record $42.7 billion.

These numbers are important because Wall Street🌼 is responsible for a huge share of our budgets.

The reasons the city and state didn’t have to cꦗut spending during the pandemic were twofold: extraordinary federal aid but also extra𒁏ordinary Wall Street revenues.

Wall Street has always made🍨 up a small fraction of state and city jobs — 2.1% and 4% of private-sector jobs, respectively.

But because of high salaries and bonuses — a half-million-dollar annual average — and New York’s high personal-income taxes, tಌhe industry makes up an outsized share of tax revenues.

As the comptroller💎 not⭕es, the state reaped $28.8 billion in tax revenues from Wall Street in fiscal year 2023 (when taxes on that record 2022 year were paid).

That haul represented a full 27.4% of state taxes — mostly paid in nosebleed personal-income taxes on bonu🐽ses and salaries, via the 10.9% state levy on top earners (and an additional 3.9% city level).

In itꦰs own record year, 2022, the city took in $6.4 billion in taxes from Wall Street, or 9.3% of total taxes, mostly personal-income taxes and commercial-property taxes for the offices Wall Street firms occupy.

(The city’s windfall came earlier than the state’s due to b🎃udget-ti🐼ming differences.)

These tax revenues are shrinking, contributin𝓡g to theꦕ city’s deficits.

The city est💜imates𒈔 personal-income tax and related revenues will fall 7%.

The state, too, “began to experience a precipitous drop in tax receipts” this year, budget officials report, with personal-income꧋ taxes down 11%.

Both the city and state expect tax revenue to recover quickly, which is why the𒉰y keep spending away; the governor’s budge🃏t proposal increases spending 4.5%.

But these projections may prove optimistic.

In a city and state economy supposedly on the upswing, the securities industry shed jobs in New York last year — 🌳with 5,200 jobs in the city, or 2.7% of industry positꦐions, disappearing.

That might not be alarming by itself.

But nationwide, the industry grew by 3.4%, or nearly 30,000 jobs.

Put another way, the industry ജisn’t losing jobs; it’s moving 🍃them to other states.

Taking the long view, SIFMA observes, “The national landscape of the securities industry has ♛changed significantly over the past 10 years,” with “most of the growth happening outside” New York.

Over the decade, the state added just 11.5% more jobs to its securities inꦇdustry, less than half the nationw𝄹ide growth of 28.7%.

Texas, the biggest gainer, added 36,900 jobs.

It would be one thing if the state budget were la𒁏te because lawmakers 💝and the governor were concerned about these trends and debating how to restructure rates and provide a better quality of life for the taxes the state and city levy, to retain higher-income people.

Instead, they’re obliviously preparing their next round of milking🍎 while the cow is already partway out the barn door.

Nicole Gelinas is a contributing editor to the Manhattan Institute’s City Journal.