Public Assets Institute > Press > Op-Eds > State shouldn’t add to joblessness

State shouldn’t add to joblessness

Jan. 22, 2009, Rutland Herald
by Jack Hoffman

While Congress gets ready to spend hundreds of billions to keep people working, why is Vermont planning to lay off state workers and slash school budgets, sending teachers to the unemployment lines?

Gov. Jim Douglas recently went to Washington with other governors to ask that the states get a share of the economic stimulus package that is intended to create jobs. Here at home, though, the governor and the Legislature are trying to balance the state budget by cutting services and eliminating state jobs. The governor also has recommended putting a freeze on the Education Fund, the one healthy, stable account in state government. The proposed freeze would require many school districts to cut their 2010 budgets below 2009 levels, which would mean laying off teachers and other staff.

People are getting fired in the private sector because demand has shrunk for the goods or services they provide. That’s not the case with public sector employees. If anything, demand for their services is increasing as more and more people turn to state government for help.

Anyone who drives on Vermont’s potholed roads knows that there is plenty of highway maintenance work to be done. With about a third of our bridges either structurally deficient or functionally obsolete, the to-do list at VTrans could keep people busy through the recession and well into the next recovery.

The demand for education doesn’t slack off in recession, either. Children still need to learn. But the governor said freezing school budgets — which means a cut for many districts — was simply a matter of fairness: Other state services are being cut during the recession, so it’s only fair to cut education, which is adequately funded. Making sure that schoolchildren are hurt because other services are being undermined doesn’t feel like fairness. It smacks more of mean-spiritedness or short-sightedness.

Vermont spends more on education than many other states; its schools also perform better than in most other states. Is it really fair to give kids mediocre schools, with fewer teachers, because other Vermonters are losing their jobs?

Creating jobs is the over-riding goal of the stimulus package Congress is debating. Disagreement centers on whether tax credits to businesses to create private-sector employment or direct government support of infrastructure projects is the most effective way to put people back to work.

Public-sector jobs are every bit as real and important to the economy as private-sector jobs. Both pay real wages, and that money in turn buys goods and services in the community, which helps support employment for others. In the most recent 12-month period for which we have data, Vermont suffered a net loss of 2,000 private-sector jobs. In the same period — November 2007 to November 2008 — state and local education jobs increased by 250, although those gains were canceled out by cuts elsewhere in state and local government.

Laying off teachers and state employees may reduce state expenditures in some areas. But it will increase the demand for unemployment benefits and put added pressure on other government services.

So how can we maintain Vermont’s public-sector jobs? Raising taxes in a recession is difficult. But on balance, temporary, targeted tax increases will cause less harm than cutting state and local services and putting more people out of work.

After the Bush administration was so lax with the $350 billion bailout of banks and other financial-industry businesses, many people are demanding more accountability. Perhaps the states shouldn’t get any job-creation money from the feds unless they demonstrate that they are doing everything in their power to minimize their own job losses.

Jack Hoffman works for the Public Assets Institute in Montpelier.

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