The Virginian-Pilot
©
RICHMOND
Sweeping spending cuts in the state budget are expected to cost Virginia 37,000 jobs over the next two years, findings in a new study suggest.
The report, released Wednesday by the Commonwealth Institute for Fiscal Analysis, also indicates that the ripple effects of a thinning work force could slow an economic recovery.
The analysis by the public-policy think tank comes less than two weeks after the General Assembly adopted a biennial budget that overcame a more than $4 billion shortfall partly through deep funding cuts to education and health programs.
"Our lawmakers have refused to acknowledge that the cuts that they've included in the budget are going to result in substantial job losses, not gains," Michael Cassidy, the institute's executive director, said during a Wednesday news conference.
"At a time when Virginians need ladders to get ourselves out of this deep economic hole that we are in, our lawmakers are handing out shovels and digging the hole even deeper," he said.
Cassidy said the projected job losses would exceed the number of people currently unemployed in Virginia Beach, Richmond, Danville, Arlington County and Charlottesville combined.
They also would "dwarf the gains that have been projected for various economic development initiatives, business tax breaks and credits."
The budget approved by the General Assembly contained most of the $50 million in economic development incentives Gov. Bob McDonnell requested.
The governor has said that package could spur the creation of more than 29,000 jobs over the next two years.
McDonnell is adamantly opposed to raising taxes to avoid spending cuts. He believes that new levies would discourage businesses from growing their work forces, and the budget before him reflects that philosophy.
"The Governor's work to cut spending, not raise taxes, while investing in job-creating policies, will ensure that Virginia is well-positioned to create jobs and grow the economy in the years ahead," McDonnell spokeswoman Stacey Johnson wrote in an e-mail.
The Commonwealth Institute has supported the concept of targeted tax hikes to avoid deeper cuts, arguing that slashing jobs leads to reduced consumer spending that can put a drag on the economy.
But that opinion isn't universally shared.
"Jobs are never lost when you leave more money in the private sector," Michael Thompson, president of the Thomas Jefferson Institute for Public Policy, said Wednesday when asked about the new study's conclusions.
"As long as government sucks up all the private-sector money," he said, alluding to federal government policies, "you're not going to have money to employ people."
Julian Walker, (804) 697-1564, julian.walker@pilotonline.com
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Government does not create jobs!
Based on the statist philosophy, the best jobs are government jobs. This is a completely false economic premise. Government draws away resources from the private sector. It produces nothing. Those jobs must be paid for by taxes. We don't need more taxes in Virginia, period. This so called "think tank" is a left wing policy factory that seeks to expand state budgets and power. They are affiliated with this pro-tax, big government group http://www.statefiscal.org/ This appears to be a left wing socialist organization. Of course the Pilot leaves that out of the story. Wake up Virginia!
Wrong on Policy
Yes, now we see the full picture of the effect of the Governor's mandate that no tax increase would be considered by his administration, and if presented by the Legislature, would be vetoed. Now that is his right; he won the election fair and square, yet few would say that he ran on a platform of cutting 35,000 jobs. In fact, this disconnect between what he said and what the effect of that policy actually is will have serious economic impacts for the entire time he is Governor. Further, his ideology that public jobs are a drag on the economy insults those who provide the important programs and services of state and local government, and reveals a lack of understanding about how government and the private sector can operate to create prosperity for all. Certainly, there needs to be a balance, but it appears to be his policy that government is a drag on prosperity, not an important factor in creating it. I think he is wrong.