Wall Street bonuses reached a record $49.2 billion last year, up 9 percent from the prior year, with the average payout climbing to $246,000. That windfall sent billions in tax revenue flowing to the city and state. But fiscal watchdogs are now warning that Mayor Zohran Mamdani’s budget rests on an optimistic read of Wall Street’s staying power, and the economic turbulence triggered by the war with Iran is already eating into that foundation.
State Comptroller Tom DiNapoli released the bonus figures Thursday, and his accompanying statement carried a clear note of caution. “Wall Street saw strong performance for much of last year, despite all of the ongoing domestic and international upheavals,” DiNapoli said. “However, we are seeing slower job growth, and geopolitical conflicts have global repercussions that pose extraordinary risks for the short- and long-term outlook on the financial sector and for broader economic markets.”
One early warning sign: bonuses grew at a slower pace than Wall Street profits themselves, which surged 30 percent to $65.1 billion. That gap suggests executives were already bracing for rougher conditions ahead, holding back payouts even as revenues climbed.
Since the war with Iran began in late February, the financial picture has darkened further. Oil prices have spiked, pushing gas prices up by roughly a third and stoking new inflation fears. The stock market has shed about 5 percent over the past month. And uncertainty is beginning to cloud the AI deal-making boom that drove so much of last year’s Wall Street growth.
Rahul Jain, state deputy comptroller for New York City, put it plainly. “Last year we were surprised at how resilient Wall Street was,” he said. “It doesn’t seem to be so robust this year.”
Against that backdrop, the Mamdani administration’s budget math looks increasingly exposed. The preliminary budget released last month projected a $4.2 billion increase in expected revenue for the fiscal year beginning July 1, 2027, driven primarily by anticipated personal income tax receipts from securities industry workers. Jain noted that the city’s projections for personal income tax growth over the three fiscal years ending in 2027 are unprecedented in recent decades. The last time the city saw increases of that magnitude, he said, was in the three years before the Great Recession hit in 2008. That comparison is not a comfortable one.
The Independent Budget Office is more restrained in its projections. IBO Director Louisa Chafee said her office expects personal income tax collections to come in $600 million below the $20.7 billion City Hall is counting on. “This difference is largely driven by IBO having a less optimistic outlook for Wall Street-driven income tax growth amid ongoing economic uncertainty,” Chafee said.
Six hundred million dollars is not a rounding error. It is the difference between a balanced budget and a painful gap that the administration would need to close through cuts, borrowing, or some combination of both.
The city will get a clearer picture of its fiscal footing once Albany finalizes the state budget, which was due March 31 but is expected to run past that deadline. Albany’s final numbers will tell City Hall how much state aid it can count on and whether Governor Kathy Hochul will sign off on Mamdani’s proposed increases in personal income taxes on the wealthy and corporate taxes on large companies. Hochul has opposed both measures, and her posture hasn’t shifted.
The mayor’s executive budget, which will reflect updated revenue projections, is expected in the coming weeks.
None of this means the city is heading toward fiscal crisis. But it does mean that Mamdani walked into City Hall at a precarious moment, with a budget blueprint that assumed Wall Street would keep delivering at a historic pace. The war in Iran, rising oil prices, and a jittery stock market have raised serious questions about whether that assumption holds. Watchdogs are saying so out loud. The administration would be wise to listen.
