All politics is local. And so is the impact of bonuses. New York Governor David Paterson predicts that Wall Street firms will cut bonuses by 20 percent this year. What's it to him? A lot, apparently. The governor predicts that each 10 percent reduction in bonuses costs the state $350 million in tax revenues.

Reuters reports that the Gov also predicted that the Empire State could lose nearly $1.7 billion in taxes due to the sluggish profits for Wall Street's financial firms.

According to Reuters:

Paterson said he was considering lobbying federal officials for aid to entities like Bear Stearns, Lehman Brothers and federally-sponsored organizations, referring to mortgage finance giants Fannie Mae and Freddie Mac.

Bear Stearns this spring was forced into the arms of JPMorgan Chase after investors lost confidence in its ability to cope with subprime losses. Lehman Brothers was later rattled by similar concerns, but remained independent.

Last week, Paterson called on Congress to enact a second economic stimulus package that would give states funds for job-creating projects, like building roads and bridges, and boost its share of Medicaid, the federal-state health insurance program for the poor, disabled and elderly.

With Wall Street on the rocks, more than over-paid traders suffer.