New York state is set to run very serious deficits into 2009. The projected budget gap is 15% of the state's general fund in 2010, up from under 10% in 2009 (see chart from WSJ in this post). To compensate for the $15 billion budget deficit, Gov. Paterson will slash spending on schools, layoff workers, raise fees, and even release inmates early. Furthermore, New York City faces its own $8 billion deficit, where Comptroller Thomas DiNapoli says the city faces the "worst fiscal crisis since the 1970s".
New York City is special, as government finance is heavily dependent on Wall Street compensation packages. The Bureau of Economic Analysis released its report on annual compensation, and New York county ranked top on the list of total compensation: $294,612,000,000 - $294 billion.
The table above to the left lists the 50 counties with the highest total compensation, ranging from New York and Los Angeles with $294 billion and $274 billion, respectively, to Riverside and Salt Lake with $31 billion each (you can see the full list of 164 counties at the BEA's website here).
The average compensation per job in New York county is $116,977, and certain to decline with negligible bonus compensation (if any) and capped pay raises on Wall Street in 2008 and 2009 (through word of mouth, I have heard of many firms capping raises at between 0%-2%). And for New York, whose government finance depends on the compensation of Wall Street, roughly 10% tax revenue base is set to decline.
Click on chart to enlarge (from the BEA report).
The broad-based cutbacks in state and local spending are sure to offset - at least partially, if not a majority - the massive fiscal stimulus package that Obama will approve in January. What a mess.