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• Recession and Recovery

An Update on State Budget Cuts
At Least 45 States Have Imposed Cuts That Hurt Vulnerable Residents and the Economy

With tax revenue still declining as a result of the recession and budget reserves largely drained, the vast majority of states have made spending cuts that hurt families and reduce necessary services. These cuts, in turn, have deepened states’ economic problems because families and businesses have less to spend. Federal recovery act dollars and funds raised from tax increases are greatly reducing the extent, severity, and economic impact of these cuts, but only to a point.

The cuts enacted in at least 45 states plus the District of Columbia since 2008 have occurred in all major areas of state services, including health care (30 states), services to the elderly and disabled (25 states and the District of Columbia), K-12 education (30 states and the District of Columbia), higher education (41 states), and other areas. States made these cuts because revenues from income taxes, sales taxes, and other revenue sources used to pay for these services declined due to the recession. At the same time, the need for these services did not decline and, in fact, rose as the number of families facing economic difficulties increased.

These budget pressures have not abated and, in fact, are increasing. Because unemployment rates remain high — and are projected to stay high well into next year — revenues are likely to remain at or near their current depressed levels. This has caused a new round of cuts. Based on gloomy revenue projections, legislatures and governors are enacting budgets for the 2011 fiscal year (which begins on July 1, 2010 in most states) with cuts that go even further than those enacted over the past two fiscal years.

Cuts to state services not only harm vulnerable residents but also worsen the recession — and dampen the recovery — by reducing overall economic activity. When states cut spending, they lay off employees, cancel contracts with vendors, reduce payments to businesses and nonprofits that provide services, and cut benefit payments to individuals. All of these steps remove demand from the economy. For instance, at least 42 states and the District of Columbia have reduced overall wages paid to state workers by laying off workers, requiring them to take unpaid leave (furloughs), freezing new hires, or similar actions. State and local governments have eliminated 212,000 jobs since August 2008, federal data show. Such measures are reducing not only the level and quality of services available to state residents but also the purchasing power of workers’ families, which in turn affects local businesses and slows recovery.

States are taking actions to mitigate the extent of these cuts. Since the recession began, over 30 states have addressed their budget shortfalls in part by increasing taxes. Like budget cuts, tax increases remove demand from the economy by reducing the amount of money people have to spend. But tax increases can be less detrimental to state economies than budget cuts because some of the tax increases affect upper-income households so are likely to result in reduced saving rather than reduced consumption. Many more states will need to consider tax increases or other revenue measures, as well as such steps as tapping state rainy day funds, as a way to minimize harmful budget cuts.

The cuts thus far in state-funded services — and the resulting harm to families’ well-being and to state economies — would have been much greater had the federal government not enacted the American Recovery and Reinvestment Act in February 2009. The measure provided roughly $140 billion over two and a half years to help states pay for education, health care, public safety, and other key services.

In some cases, it is possible to identify specific services that were slated for cuts but have been protected in whole or in part by the federal funds; these include child care in Alabama and Arizona, public safety funding in Washington, prescription drugs for seniors and tuition assistance in New York, and education funding in a number of states. The Department of Education found that through January 30, the recovery act’s Fiscal Stabilization Fund retained or created more than 295,000 education jobs and nearly 52,000 jobs in other areas, for a total of 347,000 jobs.[1]

In other cases, it is impossible to know what would have happened if states had not received the recovery act funds. But it is indisputable that families and communities would be facing much more serious consequences from state cuts.

Background: The Deep Recession Is Creating Widespread Deficits

The national recession is producing both declines in state and local revenues and increased need for public programs as residents lose jobs, income, and health insurance. In the 2009 fiscal year, the imbalance between available revenues and what was needed for services opened up budget gaps in most states. The vast majority of states also faced (or are facing) additional shortfalls in the 2010 fiscal year, which in most states began July 1, 2009. Even more budget gaps are projected for fiscal years 2011 and 2012. Total shortfalls for 2011 and 2012 are likely to reach some $300 billion. [2] Only around $40 billion of this gap will be filled by ARRA dollars, leaving a $260 billion hole that states will have to deal with on their own.

Virtually all states are required to balance their operating budgets each year or biennium. Unlike the federal government, states cannot maintain services during an economic downturn by running a deficit. States had record reserves heading into this recession, but those have mostly been drawn down. Since federal economic recovery funds are quickly dwindling, states must address remaining shortfalls with a combination of spending cuts and/or tax increases. Without additional federal aid and if states continue to cut spending as they have in the current fiscal year, the national economy stands to lose up to 900,000 public- and private-sector jobs.

Cuts Affect Wide Range of Services

States began cutting their budgets in the spring of 2008, as the recession brought sharply weakened revenues. The cuts have intensified as the economy has worsened. Even as the need for state-funded services rose, states cut funding for services by 4 percent for fiscal year 2009 and an additional 4.8 percent for 2010, according to preliminary estimates by the National Association of State Budget Officers. These cuts are affecting important services. At least 45 states plus the District of Columbia have reduced services since the recession began. Service cuts with particular ramifications for vulnerable populations have occurred in the following areas:

• Public health programs: At least 30 states have implemented cuts that will restrict low-income children’s or families’ eligibility for health insurance or reduce their access to health care services. For example, Rhode Island eliminated health coverage for 1,000 low-income parents; Tennessee has frozen enrollment in its state children’s health insurance program (CHIP); and California is increasing the costs borne by families of nearly 1 million children that participate in its CHIP program. Washington is increasing premiums by an average of 70 percent for a health plan serving low-income residents.
• Programs for the elderly and disabled: At least 25 states plus the District of Columbia are cutting medical, rehabilitative, home care, or other services needed by low-income people who are elderly or have disabilities, or are significantly increasing the cost of these services. For example, Ohio made deep cuts to community mental health services and Arizona eliminated temporary health insurance for people with serious medical problems.
• K-12 education: At least 30 states and the District of Columbia are cutting aid to K-12 schools and various education programs. California, Michigan, and Mississippi have made significant cuts to school aid. Hawaii cut 17 days from the current school year, furloughing teachers. A cut in funding means that as many as 10,000 children in Illinois may lose eligibility for early childhood education, and Massachusetts is reducing funding for a number of early care programs.
• Higher education: At least 41 states have cut assistance to public colleges and universities, resulting in reductions in faculty and staff in addition to tuition increases. The University of California is increasing tuition by 32 percent. Tuition at all 11 public universities in Florida increased by 15 percent for the 2009-2010 school year. Students in Washington and other states face significant tuition increases as well, costing families hundreds of dollars per year. Michigan and New Mexico have made deep cuts to need-based financial aid programs.
• State workforces: At least 42 states and the District of Columbia have made cuts affecting state government employees. At least 26 states have instituted hiring freezes, 14 states and the District of Columbia have announced layoffs, 26 have reduced state worker wages, and several have delayed scheduled pay increases (including cost of living adjustments). In total, state and local governments have eliminated a total of 212,000 jobs since August 2008, according to the U.S. Bureau of Labor Statistics. Additional workers have lost pay and benefits.

These measures are described in more detail in the Appendix.

The Role of Revenue Increases and Federal Dollars

Several states facing large budget shortfalls have averted deep cuts in vital services by enacting temporary or permanent revenue increases.

• In late 2007 and 2008, some ten states enacted tax increases, closed loopholes, restricted tax credits, or implemented other revenue-raising measures. Major packages were enacted in Maryland, Michigan, and New York.
• Since the recession began, over 30 states have raised taxes, sometimes quite significantly. Increases have been enacted or are under consideration in personal income, business, sales, and excise taxes. Major state revenue packages have been enacted in California, Connecticut, Delaware, Hawaii, Nevada, New Jersey, North Carolina, and Wisconsin.

States also are using funds made available in the recovery act to avert spending cuts. The law gave states roughly $140 billion over a two-and-a-half year period to help fund ongoing programs, including K-12 education, higher education, and health care. The money is addressing approximately 30 percent to 40 percent of states’ 2009 and 2010 budget shortfalls, and will be sufficient to offset about 20 percent or less of 2011 shortfalls. In state after state, it is abundantly clear that spending and service cuts in health care, education, human services, public safety, and other areas would have been much deeper had the federal funds not been available.

The 2009 tax measures and states’ use of federal recovery funds are detailed in separate Center on Budget and Policy Priorities analyses. [3]

AT LEAST 45 STATES AND THE DISTRICT OF COLUMBIA HAVE CUT SERVICES
	Public Health (30)	Elderly/ Disabled (25 plus DC)	K-12 and Early Education (30 plus DC)	Higher Education (41)	State Workforce (42 plus DC)
Alabama		X	X	X	X
Alaska
Arizona	X	X	X	X	X
Arkansas				X
California	X	X	X	X	X
Colorado	X		X	X	X
Connecticut			X	X	X
Delaware			X		X
Florida	X	X	X	X	X
Georgia	X	X	X	X	X
Hawaii			X	X	X
Idaho	X	X	X	X	X
Illinois	X		X	X	X
Indiana	X		X	X
Iowa			X	X	X
Kansas		X	X	X	X
Kentucky			X	X	X
Louisiana	X	X		X	X
Maine	X	X	X	X	X
Maryland	X	X	X	X	X
Massachusetts	X	X	X	X	X
Michigan	X	X	X	X	X
Minnesota	X	X		X	X
Mississippi			X	X	X
Missouri	X	X			X
Montana
Nebraska			X	X
Nevada	X		X	X	X
New Hampshire	X				X
New Jersey	X		X	X	X
New Mexico		X		X	X
New York	X			X	X
North Carolina	X	X		X	X
North Dakota
Ohio	X	X	X	X	X
Oklahoma	X			X	X
Oregon			X		X
Pennsylvania		X		X	X
Rhode Island	X	X	X	X	X
South Carolina	X	X	X	X	X
South Dakota				X	X
Tennessee	X	X		X	X
Texas				X
Utah	X	X	X	X	X
Vermont		X		X	X
Virginia	X	X	X	X	X
Washington	X	X	X	X	X
West Virginia
Wisconsin	X			X	X
Wyoming	X				X
Dist. of Columbia		X	X		X

Appendix: Budget Cuts by Area

At least 45 states plus the District of Columbia have enacted budget cuts that will affect services for children, the elderly, the disabled, and families, as well as the quality of education and access to higher education (see table). Those cuts are detailed below.

Public Health Programs

At least 30 states have implemented cuts that will restrict eligibility for health insurance programs and/or access to health care services.

• Arizona has capped enrollment in KidsCare, the state’s CHIP program. Nearly 10,000 working parents in Arizona have already lost health care coverage that they received through KidsCare, due to a lack of funding for the parental component of the program. The state is also reducing its Medicaid rolls by requiring some adult beneficiaries to reapply for benefits more frequently. (Research has shown such added paperwork requirements cause many eligible people to lose coverage.)
• California cut funding for the Healthy Families program, the state’s CHIP program. To make up for the lost funds, the nearly 1 million children in the program will have to pay more for visits to health care providers, and many will have to pay higher premiums as well. These cost increases may cause some families to drop from the program. In addition to these changes, the state cut nearly all funding for services supporting HIV/AIDS patients, and it completely eliminated funding for the state’s domestic violence shelter program and maternal, child, and adolescent health programs.
• Massachusetts sharply cut funding for subsidized health insurance for close to 28,000 legal immigrants. The affected individuals will receive at best a level of health coverage that falls far short of basic health insurance.
• New Jersey’s new governor has announced plans to eliminate eligibility for a key state-subsidized health insurance program for nearly 12,000 legal immigrant adults and to freeze new enrollment in the program for other adults.
• Rhode Island has reduced the maximum income level at which parents can receive public health insurance to 175 percent of the federal poverty line from 185 percent, eliminating coverage for approximately 1,000 parents.
• Utah cut Medicaid funding for physical therapy, occupational therapy, and speech and hearing therapy services for adults — as well as Medicaid provider rates for hospitals, skilled nursing, and dentists.
• Washington is increasing premiums by an average of 70 percent for a health plan serving low-income residents. Premiums for the poorest plan members — those earning up to 125 percent of the poverty line — will double. The premium increase is expected to cause between 7,000 and 17,000 enrollees to leave the program.
• Several states, including California, Michigan, Nevada, and Utah, have dropped coverage of dental and/or vision services for adult Medicaid recipients.
• Other states that have enacted cuts in Medicaid or CHIP include Colorado, Florida, Georgia, Idaho, Illinois, Indiana, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Hampshire, New Jersey, New York, North Carolina, Ohio, Oklahoma, South Carolina, Tennessee, Virginia, Wisconsin, and Wyoming. Cuts include reduced or frozen reimbursements to health care providers.

Programs for the Elderly and Disabled

At least 25 states and the District of Columbia have cut medical, rehabilitative, home care, or other services needed by low-income people who are elderly or have disabilities or significantly increased the amounts that such people must pay for services.

• Alabama has ended homemaker services for approximately 1,100 older adults. These services often allow people to stay in their own homes and avoid nursing home care.
• Arizona has eliminated temporary health insurance for people with disabilities who are coping with serious medical problems. The state also eliminated general assistance, a program designed to provide time-limited cash assistance to adults with physical or mental disabilities. In addition, in February 2009 the state eliminated independent living supports for 450 elderly residents and respite-care funding for 130 caregivers. It also established a waiting list for vocational rehabilitation services, affecting 2,100 disabled individuals.
• Florida has cut Medicaid reimbursements to hospitals and community-based services for the elderly, such as meals and homemaker services.
• Georgia has reduced such programs for the elderly as services for people with Alzheimer’s Disease, elder service centers, prescription drug assistance, and elder support, including a recent cut of 5 percent in the FY 2011 budget.
• Idaho’s Department of Health and Welfare has reduced or eliminated cash assistance to 1,250 low-income elderly adults and people with disabilities.
• In Massachusetts, the governor has ordered cuts in programs for elders, including home care, geriatric mental health services, and prescription drug assistance.
• Minnesota has capped enrollment at current levels for a program that provides expanded health services and care coordination for people with disabilities. The state has also restricted enrollment in or scaled back a number of programs that allow the elderly and disabled to receive services in their home that they might otherwise only be able to receive in a nursing home, hospital, or other institution. As a result, thousands of elderly and disabled Minnesotans will see their access to these services denied or significantly reduced.
• New Mexico has cut cash assistance payments for low-income disabled residents by one-third. The state provides these payments to an average of 2,100 disabled individuals each month who cannot work and are not eligible for Temporary Assistance for Needy Families (TANF).
• Pennsylvania has cut its state supplemental security income (SSI) supplement by $5 per month for individuals and $10 per month for couples.
• Ohio has eliminated virtually all state funding for mental health treatment for individuals who are not eligible for the state’s Medicaid program.
• Tennessee has reduced community-based services for people with intellectual disabilities and cut nursing services for some adults with serious disabilities.
• Vermont has reduced some home-based services, such as housekeeping and shopping, for people who are elderly or disabled. Such services help people stay in their own homes and possibly delay or avoid more expensive nursing home care.
• Virginia has decreased reimbursements for special hospitals serving people with needs related to mental health, mental retardation, or substance abuse. The state also reduced pass-through grants for various aging programs and funding for local mental health providers.
• Washington imposed a time limit on the receipt of medical and cash assistance by people who are physically and/or mentally incapacitated and unable to work. In FY 2011, the limit will reduce the number of people receiving medical assistance by 2,350 and the number of people receiving cash assistance by 2,828.
• Other states that have capped or reduced funding for programs that serve people who have disabilities or are elderly include California, the District of Columbia, Kansas, Louisiana, Maine, Maryland, Michigan, Missouri, North Carolina, South Carolina, and Utah.

K-12 Education and Other Childhood Education Programs

At least 30 states and the District of Columbia have implemented cuts to K-12 education.

• Arizona eliminated preschool for 4,328 children, funding for schools to provide additional support to disadvantaged children from preschool to third grade, aid to charter schools, and funding for books, computers, and other classroom supplies. The state also halved funding for kindergarten, leaving school districts and parents to shoulder the cost of keeping their children in school beyond a half-day schedule.
• California reduced K-12 aid to local school districts by billions of dollars and is cutting a variety of programs, including adult literacy instruction and help for high-needs students.
• Colorado has reduced public school spending in FY 2011 by $260 million, nearly a 5 percent decline from the previous year. The cut amounts to more than $400 per student.
• Georgia cut state funding for K-12 education for FY 2011 by $403 million or 5.5 percent. The cut has led the state’s board of education to exempt local school districts from class size requirements to reduce costs..
• Hawaii shortened the current school year by 17 days and is furloughing teachers for those days.
• Illinois reduced funding for early childhood education by 10 percent, which could cause as many as 10,000 children to lose eligibility.
• Maryland cut professional development for principals and educators, as well as health clinics, gifted and talented summer centers, and math and science initiatives.
• Michigan cut its FY 2010 school aid budget by $382 million, resulting in a $165 per-pupil spending reduction.
• Mississippi cut its FY 2010 funding for K-12 education by 9.5 percent, mostly out of the Mississippi Adequate Education Program established to bring per-pupil spending up to adequate levels in every district.
• Massachusetts cut Head Start, universal pre-kindergarten programs, and early intervention services to help special-needs children develop appropriately and be ready for school. The state also cut K-12 funding, including for mentoring, teacher training, reimbursements for special education residential schools, services for disabled students, and programs for gifted and talented students.
• New Jersey cut funding for afterschool programs aimed to enhance student achievement and keep students safe between the hours of 3 and 6 p.m. The cut will likely cause more than 11,000 students to lose access to the programs and 1,100 staff workers to lose their jobs.
• Rhode Island cut state aid for K-12 education and reduced the number of children who can be served by Head Start and similar services.
• Virginia’s $700 million in cuts for the coming biennium include the state’s share of an array of school district operating and capital expenses and funding for class-size reduction in kindergarten through third grade. In addition, a $500 million reduction in state funding for some 13,000 support staff such as janitors, school nurses, and school psychologists from last year’s budget was made permanent.
• Washington suspended a program to reduce class sizes and provide professional development for teachers; the state also reduced funding for maintaining 4th grade student-to-staff-ratios by $30 million.
• State education grants to school districts and education programs have also been cut in Alabama, Connecticut, Delaware, the District of Columbia, Florida, Idaho, Indiana, Iowa, Kansas, Kentucky, Maine, Nebraska, Nevada, Ohio, Oregon, South Carolina, and Utah.

Colleges and Universities

At least 41 states have implemented cuts to public colleges and universities and/or made large increases in college tuition to make up for insufficient state funding.

• Arizona’s Board of Regents approved in-state undergraduate tuition increases of between 9 and 20 percent as well as fee increases at the state’s three public universities. Additionally, the three state universities must implement a 2.75 percent reduction in state-funded salary spending and plan to do so through a variety of actions, such as academic reorganization, layoffs, furloughs, position eliminations, hiring fewer tenure-eligible faculty, and higher teaching workloads.
• The University of California is increasing tuition by 32 percent and reducing freshman enrollment by 2,300 students; the California State University system will cut enrollment by 40,000 students.
• Colorado funding for higher education was reduced by $62 million from FY 2010 and this has led to cutbacks at the state’s institutions. For example, the University of Colorado system will lay off 79 employees in FY 2011 and has increased employee workloads and required higher employee contributions to health and retirement benefits.
• Florida cut university budgets and community college funding and raised tuition at its 11 public universities by 15 percent in the 2009-10 school year. The University of Florida will eliminate 150 positions this year, including layoffs of over 50 staff and faculty; Florida State University is laying off up to 200 faculty and staff.
• Georgia cut state funding for public higher education for FY2011 by $151 million, or 7 percent. As a result, undergraduate tuition for the fall 2010 semester at Georgia’s four public research universities (Georgia State, Georgia Tech, the Medical College of Georgia, and the University of Georgia) will increase by $500 per semester, or 16 percent. Community college tuition will increase by $50 per semester.
• The University of Idaho has responded to budget cuts by imposing furlough days on 2,600 of its employees statewide. Furloughs will range from 4 hours to 40 hours depending on pay level.
• Indiana’s cuts to higher education have caused Indiana State University to plan to lay off 89 staff.
• Michigan is reducing student financial aid by $135 million (over 61 percent), including decreases of 50 percent in competitive scholarships and 44 percent in tuition grants, as well as elimination of nursing scholarships, work-study, the Part-Time Independent Student Program, Michigan Education Opportunity Grants, and the Michigan Promise Scholarships.
• New Mexico eliminated over 80 percent of support to the College Affordability Endowment Fund, which provides need-based scholarships to 2,366 students who do not qualify for other state grants or scholarships.
• New York’s state university system increased resident undergraduate tuition by 14 percent beginning with the spring 2009 semester.
• South Dakota’s fiscal year 2011 budget cuts state support for public universities by $6.5 million and as a result the Board of Regents has increased university tuition by 4.6 percent and cut university programs by $4.4 million.
• Texas instituted a 5 percent across-the-board budget cut that reduced higher education funding by $73 million.
• Virginia’s community colleges implemented a tuition increase during the spring 2010 semester.
• Washington reduced state funding for the University of Washington by 26 percent for the current biennium; Washington State University is increasing tuition by almost 30 percent over two years. In its supplemental budget, the state cut 6 percent more from direct aid to the state’s six public universities and 34 community colleges, which will lead to further tuition increases, administrative cuts, furloughs, layoffs, and other cuts. The state also cut support for college work-study by nearly one-third and suspended funding for a number of its financial aid programs.
• Other states cutting higher education operating funding and financial aid include Alabama, Arkansas, Connecticut, Hawaii, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Nebraska, Nevada, New Jersey, North Carolina, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Vermont, and Wisconsin.

Cuts in Other Services

States also are making cuts in a variety of other programs, including those for very poor families and other vulnerable populations.

• Arizona is reducing TANF cash assistance grants for 38,500 low-income families, eliminating substance abuse services for 1,400 parents and guardians, and decreasing homeless shelter capacity by 1,100 individuals. The state also stopped accepting new families in its child care assistance program in February 2009, thereby denying assistance to at least 10,000 children.
• California is eliminating cost-of-living adjustments to cash assistance programs for low-income families and cutting child care subsidies.
• Colorado is cutting payment rates for mental health providers and eliminating funding for residential treatment for an estimated 626 patients each year in the state’s mental health institutes.
• In Connecticut, the governor has ordered budget cuts to programs that help prevent child abuse and provide legal services for foster children.
• The District of Columbia cut its homeless services funding by more than $12 million, or 20 percent. It also reduced its cash assistance payments to needy families and cut funding for services that help low-income residents stay in their own homes and communities.
• Georgia is cutting funding for low-income family support programs by 7 percent, primarily through staffing cuts including layoffs and furloughs of workers who help families apply for food stamps, Medicaid, and cash assistance.
• Idaho’s Department of Health and Welfare has closed nine of its 45 field offices across the state, limiting access to public assistance services.
• Illinois has reduced funding for child welfare, mental health, youth services, and other programs.
• In Maine, the governor has cut funding for homeless shelters.
• Maryland has cut reimbursement rates for institutions that provide services to abused and neglected children.
• Michigan reduced funding by 38 percent for the No Worker Left Behind program, a job training and education grant program administered through the Department of Labor.
• Minnesota has cut the state’s renter’s credit by 27 percent, an average of $129 per taxpayer. The credit provides a tax refund to over 270,000 low- and moderate-income Minnesota renters.
• The Nevada welfare agency will make it harder for low-income families to receive cash assistance and health insurance, with the expected result that fewer families will receive those benefits. For instance, the state will require some families that have lost benefits to wait longer before reapplying.
• Rhode Island has cut funds for affordable housing, eliminated health insurance for home-based child care providers, restricted TANF cash assistance for children, reduced health insurance for retired state workers, and cut support to localities by $10 million.
• The South Carolina Department of Juvenile Justice has lost almost one-fourth of its state funding, resulting in over 260 layoffs and the closing of five group homes, two dormitories, and 25 after-school programs.
• To operate within a reduced budget, the Chief Justice in Vermont ordered the court system to close for half a day each week.
• Texas has cut the number of children in a child care subsidy program by about 4,000 and increased waiting lists.
• A number of other states are making cuts to child care assistance programs, including Massachusetts and Ohio.

Some states, such as Connecticut, Delaware, Maryland, Michigan, Minnesota, New Hampshire, New Jersey, New York, Ohio, Rhode Island, Virginia, Wisconsin, and Wyoming, have implemented cuts to localities, leading to local concerns about reductions in funding for policing, child care assistance, meals for the elderly, hospice care, services for veterans and seniors, and other services.

Cuts in State Government Workforces

At least 42 states plus the District of Columbia are eliminating or not filling various state jobs, imposing mandatory furloughs (time off without pay), or making other cuts affecting their state workforce. Such steps can make it more difficult for residents to obtain state services. Cutting staff — whether on a permanent or temporary basis — also may contribute to increased unemployment.

• A number of states are imposing furloughs and/or pay cuts for some state employees. These include Arizona, California, Colorado, Connecticut, Delaware, Georgia, Hawaii, Idaho, Iowa, Kentucky, Maine, Maryland, Massachusetts, Michigan, Nevada, New Jersey, New Mexico, North Carolina, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, Utah, Virginia, and Wisconsin.
• Arizona closed down 11 Department of Motor Vehicle offices, resulting in layoffs of 115 employees.
• Iowa will lay off almost 200 state employees due to a recent across-the-board state agency cut of 10 percent.
• New Jersey has eliminated 2,000 state positions by encouraging early retirement, leaving vacancies unfilled, and laying off staff.
• In recent rounds of budget cuts Maryland has laid off some 270 employees. Most of these positions have come from the Health, Public Safety, and Transportation departments.
• Missouri has laid off nearly 700 workers to address its mid-year deficit.
• The Tennessee governor announced elimination of over 2,000 state positions, about 5 percent of the state workforce. Some 1,500 employees accepted buy-outs for early retirement.
• In Washington, a hiring freeze imposed by the governor in August 2008 caused the state’s workforce to decline by more than 1,400. In January 2009 the state replaced the freeze with a cap on the number of budgeted positions at each state agency; the state’s workforce is expected to fall by another 2,600 under the cap.
• Virginia has laid off several hundred workers.
• Hiring freezes have also been ordered in Alabama, Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Hawaii, Iowa, Kansas, Louisiana, Maine, Michigan, Minnesota, Mississippi, New Hampshire, New Mexico, New York, North Carolina, Pennsylvania, South Dakota, Vermont, Wisconsin, and Wyoming.
• Additional states — such as Florida, Illinois, Maine, Massachusetts, Michigan, Ohio, South Carolina, and Wisconsin, plus the District of Columbia — have laid off or announced plans to lay off state employees.

The U.S. Bureau of Labor Statistics confirms that these cuts are having a significant direct impact on employment. The total number of people employed by state and local governments has fallen by 212,000 since August 2008, at a time when the need for the services produced by those workers has increased. These employment numbers are in addition to other measures such as furloughs and cuts to benefits and wages that also reduce workers’ purchasing power and thereby undermine the ability of the national economy to recover.

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