In total, budget cuts would cost both workers and businesses billions of dollars in reduced economic output, the study from the NC Budget & Tax Center finds
Most significant: the study uses the same analytic tool that the UNC Center for Competitive Economies used earlier this year. Unlike the UNC study, the BTC analysis takes into account the impact of both tax cuts and budget cuts.
Taking into account the net effect of the combined tax cut package and budget cut package, this budget will cost the state a cumulative 29,782 jobs, $1.2 billion in lower wages, and $2.3 billion in lost industry output by FY 2012-13, the study finds.
At state leaders’ behest, the UNC Center used its IMPLAN modeling tool to estimate how many jobs the budget would create through tax cuts – but their analysis did not consider the reduction in jobs and investments in public structures that would be required with fewer tax dollars available.
The BTC analysis also uses updated data and the newest version of the IMPLAN software to assess the full impact of the legislative budget – both spending and revenue proposals – on the economy.
Factoring in those lost investments using the same model, the BTC study found that the cumulative impact of budget cuts will be $1.8 billion in lost labor income and $3.9 billion in reduced industry output, destroying a total of 44,576 jobs once the budget cuts are fully realized in Fiscal Year 2012-13.
The budget’s proposed tax cut package yields significantly weaker economic benefits than hoped, creating only 14,793 jobs by FY2012-13. This is clearly insufficient to counterbalance the negative impacts of the budget cuts.
“When we compare apples to apples, it becomes very clear that this budget would cost North Carolina tens of thousands of jobs,” said Alexandra Forter Sirota, director of the NC Budget & Tax Center. “A better approach to closing the shortfall would be to raise the revenue needed to fund vital public investments in our schools, health systems and other vital public structures.”
The job losses would hurt the middle class disproportionately, with jobs paying an average of $40,438 per year being affected most.
The NC Budget & Tax Center does rigorous, evidence-based research on economic policy matters that affect working families in North Carolina.
FOR MORE INFORMATION, CONTACT: Alexandra Forter Sirota, email@example.com, (919) 861-1468; or (919) 801-0465; Jeff Shaw, Director of Communications, NC Justice Center, firstname.lastname@example.org, (919) 863-2402 (office) (503) 551.3615 (mobile).