Deep Budget Cuts Will Add to Unemployment Rolls at ... ( HARRISBURG Pa. July 9 /- A state budg...)

Deep Budget Cuts Will Add to Unemployment Rolls at Wrong Time

Date:7/9/2009

HARRISBURG, Pa., July 9 /PRNewswire/ -- A state budget based entirely on cuts will accelerate Pennsylvania's job losses and delay any economic recovery in the state when the recession is over, according to a labor economist with the Keystone Research Center.

State House leaders recently announced their intention to produce a no tax-increase budget that will make $1.7 billion in additional cuts to Senate Bill 850, a bare-bones budget passed by the Senate in May. At a minimum this budget would result in 6,000 state employee layoffs, hospital closures, a more than a billion dollar cut in education funding, and higher local property taxes. The Hospital and HealthSystem Association of Pennsylvania estimates that Medicaid cuts contained in Senate Bill 850 would put 13,000 hospital employees across the state out of a job.

Still, some lawmakers want to resolve the current budget crisis with deep cuts to essential services, including education, health care, and public safety. Governor Rendell and other legislators favor a modest increase in the personal income tax, along with other targeted revenue measures, the use of budget reserves, and cuts to discretionary programs.

Keystone Research Center labor economist Mark Price explained that both tax increases and state spending cuts have an impact on the economy, but budget cuts do more harm than raising taxes during a severe recession. Price has a full analysis online: http://66.147.242.158/~papolicy/?p=1267.

Nobel Prize-winning economist Joseph Stiglitz and others have found that tax increases, especially on higher-income earners, are less damaging to the economy than spending cuts.

Price said that is because every dollar in state budget cuts reduces a full dollar of economic activity. Individuals, espec
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