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Budget Cuts Cost Thousands of Virginia Jobs

Posted on March 25, 2010

Spending cuts in the state budget are expected to eliminate thousands of Virginia jobs, a new study suggests (click here).

The study says that Virginia will lose 37,000 jobs over the next two years.

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.

According to HamptonRoads.com, 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.”

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