MEDIA RELEASE: State Budget Will Cost Thousands of Private Sector Jobs

MEDIA RELEASE: State Budget Will Cost Thousands of Private Sector Jobs
“Right-sizing” state government downsizes North Carolina’s economy

RALEIGH (August 25, 2011) – The recently enacted state budget will have severe and negative impacts on the state’s economy, according to a new report released by the North Carolina Budget & Tax Center.

Specifically, the report finds that the budget will kill thousands of jobs across the state, ranging from the loss of 1,624 jobs in the Northeast to 9,242 in the Research Triangle—and a minimum of 42% of these job losses will occur in the private sector.

“In a misguided effort to 'right-size' state government during a jobs crisis, this budget’s $2.6 billion in spending cuts only serve to downsize the state’s economy, with especially negative consequences for rural North Carolina,”
said Allan Freyer, a policy analyst with the BTC. “This report demonstrates that deep cuts to public sector investments will also damage private sector businesses and increase unemployment across the board.”

Unlike other economic impact studies released during the recent budget debate, this BTC report examines the economic consequences of the “whole budget”—taking into account both the plan’s $2.6 billion in spending cuts and its $1.6 billion in tax changes in FY2012-13—for all seven regions across the state, and the results are ugly for every region across the state. Specifically, the BTC report finds the following:

Every region will have more money taken of the local economy through spending cuts than is put back in through tax cuts.
Rural regions are especially hard-hit, averaging a loss of $1.80 in spending cuts for every $1.00 put back into those regions through the tax cut, while urban regions like Charlotte only lose $1.50 in spending cuts for every $1.00 gained through tax cuts.

In addition, spending cuts will also more than wipe out any positive job creation related to the tax cut in every region across the state. Once budget cuts take full effect in FY2012-13, the whole-budget impact will cost each region between 1,624 and 9,242 lost jobs and between $65 million and $486 million in lost labor income.

Contrary to the hopes of legislative leaders, a high percentage of these job losses will occur in private sector industries like hospitals, retail, and medical device manufacturers. Private sector losses range from 42% of all jobs lost in the Eastern region to 60% in the Piedmont Triad.

Within these overall impacts, the unnecessary loss of federal matching dollars for SCHIP and Medicaid will also cause significant job losses, ranging from a low of 529 jobs lost in the Northeastern region to a high of 3,900 jobs lost in the Research Triangle.

The budget is a bad trade-off for the state, killing 3.4 jobs from spending cuts for every job gained back from tax cuts. The impacts are especially negative for rural areas, which lose an average of 4 jobs due to spending cuts for every job gained back through tax cuts. Urban regions like Charlotte only lose an average of 2.7 jobs from spending cuts for every job gained from tax cuts.

Counties included in each region can be seen below, with links to reports on each region.

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FOR MORE INFORMATION, CONTACT: Allan Freyer, Public Policy Analyst, Budget & Tax Center, allan@ncjustice.org, 919.856.2151; Jeff Shaw, director of communications, NC Justice Center, jeff@ncjustice.org, 503.551.3615 (mobile).
 

Research Triangle Region: Chatham, Durham, Franklin, Granville, Harnett, Johnston, Lee, Moore, Orange, Person, Vance, Wake, and Warren.

Piedmont Triad Region: Alamance, Caswell, Davie, Davidson, Forsyth, Guilford, Montgomery, Randolph, Rockingham, Stokes, Surry, and Yadkin.

Western Region:
Alleghany, Ashe, Avery, Buncombe, Burke, Caldwell, Cherokee, Clay, Graham, Haywood, Henderson, Jackson, Macon, Madison, McDowell, Mitchell, Polk, Rutherford, Swain, Transylvania, Watauga, Wilkes, and Yancey.

Greater Charlotte Region: Alexander, Anson, Cabarrus, Catawba, Cleveland, Gaston, Iredell, Lincoln, Mecklenburg, Rowan, Stanly, and Union.

Southeastern Region
: Bladen, Brunswick, Cumberland, Columbus, Hoke, New Hanover, Pender, Richmond, Robeson, Sampson, and Scotland.

Eastern Region: Carteret, Craven, Duplin, Edgecombe, Greene, Jones, Lenoir, Nash, Onslow, Pamlico, Pitt, Wayne, and Wilson.

Northeastern Region: Beaufort, Bertie, Camden, Chowan, Currituck, Dare, Gates, Halifax, Herford, Hyde, Martin, Northampton, Pasquotank, Perquimans, Tyrrell, and Washington.

 

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