Oct 28 (Reuters) – New York state’s budget deficit will surge to $47 billion — up about $20 billion from the previous estimate — over the next few years because it is the “epicenter” of the financial crisis, Gov. David Paterson said on Tuesday.

Despite repeated cuts, the deficit in the current budget has grown to $1.5 billion and the two-year shortfall now totals $14 billion, the Democrat added at a news conference.

Job losses on Wall Street, which drives the state’s economy and gives it 20 percent of its tax revenues, now are expected to hit 45,000. That is about a third more than the 30,000 positions lost after the September 11 air attacks in 2001.

Economists say each securities industry job, which on average paid $379,000 last year, spurs hiring by service companies, from shops to advertising firms. New York now projects a total of 160,000 workers will lose their jobs.

Wall Street giants are still struggling to withstand an unprecedented bust that has already claimed Bear Stearns, Lehman Brothers LEH.NLEHMQ.PK and Merrill Lynch MER.N and forced investment banks Morgan Stanley (MS.N) and Goldman Sachs (GS.N) to become commercial banks.

“Don’t get me wrong. There will be hard and painful cuts,” Paterson said, adding he hopes to get ahead of the curve by issuing his new budget in December, a month ahead of time.

NOVEMBER’S EMERGENCY SESSION

Before that, he has recalled legislators for another emergency session on Nov. 18. Paterson wants their recommendations as soon as Nov. 7, just a few days after the Nov. 4 elections that will decide whether the Republican-led state Senate keeps or expands its one-seat majority.

The Assembly Democrats have a wide majority and Paterson again resisted their plan to raise millionaires’ income taxes.

Referring to a previous meeting with majority and minority leaders of both chambers, he said: “All four legislators, when they sat right here on Oct. 4, made it pretty clear that we would be trying to do this without raising taxes, which we see as exaggerating the problem at this time.”

Republican Senate Majority Leader Dean Skelos, in a statement, said: “As I have said all along, New York State must not balance its budget by offloading its costs to schools and local governments, and forcing them to raise local taxes to make up for the shortfall.”

Paterson has repeatedly said the state will still have a huge deficit even if it caps spending at the rate of inflation, and Skelos did not repeat this recommendation.

Democratic Assembly Speaker Sheldon Silver said that while “deep” cuts will be necessary: “We must ensure that the burden of New York’s fiscal crisis is not borne exclusively by working families and the middle class that depend on government services, and that any solution demands shared sacrifice from every segment of our society.”

Though Americans’ outrage over Wall Street’s excesses might be mounting after the federal government’s $700 billion bank bailout, a survey released on Monday found many financial professionals still expect fat bonuses by the end of the year. For details on the new survey, click on: [ID:nN27529719] Paterson said he would not go after the lucrative payouts.

“What a private employer does with its own employees, I’m not going to interfere with that,” the governor said, but he noted bonuses could plunge 50 percent. On average, securities workers earned $379,000 last year, according to the Empire Center, a conservative research group in Albany.

In congressional testimony set for Wednesday, Paterson said he will push for a second U.S. economic stimulus package, noting the federal government increasingly takes more money from New York than it sends back. That gap now totals $89 billion, the governor said, up from over $61 billion in 2007.

“As I’ve said many times, if the federal government would just let New York manage our resources …,” Paterson said.

He pointed out that Arizona, home to U.S. Republican presidential candidate John McCain, gets back the biggest dollar amount from the U.S. government, while Alaska, whose governor, Sarah Palin, is the GOP vice presidential candidate, gets the most back on a per capita basis.

“That’s why they’re so comfortable,” Paterson said. (Reporting by Joan Gralla; Editing by Jan Paschal)

Read article here