Why is state aid vital to immediate job creation and long-term economic recovery?
State deficits are expected to total $350 billion through state fiscal year 2011. Without aid, states will have to cut jobs that provide vital services like education, health care and public safety or raise taxes. At least 33 states have already made or proposed budget cuts in areas such as health care and education, and at least 14 states have raised revenues. [CBPP, 1/16/09] And states could be forced to cut as many as 425,000 jobs in FY2009 and almost 900,000 jobs in FY2010 for police, teachers and firefighters for example. [CEPR, 12/30/08] These state budget cuts and tax increases will further weaken the economy, by shrinking overall demand. Every dollar in aid to state government generates $1.38 in economic activity, as states have the mechanisms in place to spend their federal dollars immediately on critical needs.
