Weekly Wrap: Doing the Math on State Jobs

By: - August 21, 2009 12:00 am

On the same day (Aug. 20) the Rockefeller Institute of Government released a report saying state and local governments have added 110,000 jobs since the start of the recession, six states were discussing layoffs of state employees.

North Carolina officials said state mental hospitals and homes for developmentally disabled would eliminate 354 jobs because of budget cuts by the Legislature and Gov. Beverly Perdue (D). Officials in Logan County, Ill., said the local economy would lose million if 100 corrections employees lose their jobs at two local prisons. A Hawaii government employees union filed a complaint seeking to block Gov. Linda Lingle’s (R) planned layoff of 1,100 state workers.

A California columnist asserted Gov. Arnold Schwarzenegger (R) would probably choose layoffs over furloughs in future budget cuts. Virginia Gov. Tim Kaine (D), coping with a new .5 billion shortfall, said he would lay off employees, among other actions, to close the gap. In Colorado, advocates for the homeless, indigent and uninsured said Democratic Gov. Bill Ritter’s budget-cutting plan, which includes cutting 270 state jobs, would affect poor Coloradoans the most.

Job cuts are an almost daily conversation in many state capitals, so why are states adding jobs, as the Rockefeller Institute found?

The answer is that most state and local governments have not been growing jobs recently. Governments added most of the 110,000 jobs during the first eight months of the recession, which started in December 2007. That was in fiscal year 2008, when state officials spared jobs in many states.

Since August 2008, the second month of the 2009 fiscal year, the Rockefeller Institute said state government employment dropped by about 33,000 jobs, reflecting the cuts that lawmakers and governors enacted in 2009 budgets. The cuts in fiscal 2010, which began July 1, are even deeper than they were last year.

Wayside Waifs, Kansas City’s largest humane society, has been located in Missouri for 65 years. Yet the nonprofit is exempt from Kansas sales taxes.

Joan Wagnon, Kansas’ secretary of revenue, thinks that’s wrong because of the budget problems the Sunflower State is suffering. “If you had all the money in the world, I guess it’s OK to exempt a Missouri humane society,” she told the Topeka Capital-Journal . “We don’t have all the money in the world.”

Kansas loses about billion a year in sales tax exemptions, many of which bother Wagnon and others because the breaks eat into revenue. The same issue was on the minds of Iowa and New Mexico officials this week following the lead of many states considering repealing some of the tax exemptions.

In Iowa, state revenue officials released a report showing the cost of tax breaks went up 50 percent this year, or million. The total million projected cost will further strain the state budget, some legislators told the Des Moines Register .

New Mexico Gov. Bill Richardson (D) said in an interview with the New Mexico Independent he would consider taking another look at some of the tax breaks approved over the years “to see if some may have outlived their usefulness.” But he said he wants to keep an income tax cut enacted in 2003 and a series of motion picture tax incentives approved to lure filmmakers to New Mexico.

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Stephen Fehr

Stephen Fehr is a senior officer with Pew’s government performance portfolio. He is a lead writer on many of the products generated by the portfolio, specializing in state and local fiscal health.