Governors are Proposing Further Deep Cuts in Services, Likely Harming Their Economies

A new report by the Center on Budget and Policy Priorities discusses how budget cuts will actually harm their state's economies:

Cutting state services not only harms vulnerable residents but also slows the economy’s recovery from recession by reducing overall economic activity. When states cut spending, they lay off employees, cancel contracts with vendors, reduce payments to businesses and nonprofits that provide services, and cut benefit payments to individuals. All of these steps remove demand from the economy.

State and local governments have eliminated 450,000 jobs since August 2008, federal data show, and state budget cuts have cost additional jobs in the private sector.  These job losses shrink the purchasing power of workers’ families, which in turn affects local businesses and slows recovery.

Moreover, many of the services being cut are important to states’ long-term economic strength.  Research shows that in order to prosper, businesses require a well-educated, healthy workforce. Many of the state budget cuts described here will weaken that workforce in the future by diminishing the quality of elementary and high schools, making college less affordable, and reducing residents’ access to health care.  In the long term, the savings from today’s cuts may cost states much more in diminished economic growth.

Click here to read the full report.