Another Downside of a Cuts-Only Approach to State Shortfalls

March 2, 2012 at 5:24 pm

We’ve noted that states’ cuts-only approach to their budgets has resulted in tuition hikes for public higher education that make college less accessible and pose risks to long-term economic growth.  The New York Times today illustrates another downside of cutting higher education funding:  it leads to cuts in college-level training programs for the jobs in greatest demand today.

Weakening these programs at a time when unemployment is high and the recovery is fragile will simply make it harder to match workers’ skills with available jobs and get people back to work.

“At one community college in North Carolina — a state with a severe nursing shortage — nursing program applicants so outnumber available slots that there is a waiting list just to get on the waiting list,” the article notes.

North Carolina could have avoided this problem.  Before enacting its current two-year budget, the state was more than 10 percent short of what it needed to sustain services like higher education, due to the weak economy.  Yet policymakers let a temporary sales tax increase and an income tax surcharge on wealthy households and corporations expire.  Making matters worse, they passed business tax breaks that cost the state over $100 million this fiscal year.  As a result, among other cuts, the state cut higher education funding by nearly $500 million annually.

North Carolina could have done more to protect higher education and meet its need for nurses by taking a more balanced approach that included additional revenues.

The Times article also notes that state colleges in Michigan, Florida, and Texas (among other states) have “eliminated entire engineering and computer science departments.”  All three states faced budget gaps prior to enacting their budgets for the current year; none took a balanced approach to address those shortfalls.

Indeed, Michigan passed a large tax cut that opened an even bigger hole in its budget, Florida passed a more modest tax cut, and Texas refused to tap into its hefty rainy day fund.  All three states made deep cuts to higher education.

States have begun to recover from the revenue collapse that led to these cuts.  But they are digging out of a very deep hole and it will take years before revenues have returned to normal.  Consequently, states are going to need to raise revenue to prevent additional cuts to services and restore some of the deep cuts they’ve made over the last few years.   “Cutting training for jobs the economy needs most,” as the Times puts it, is hardly a way to build a strong economy.

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More About Phil Oliff

Phil Oliff

Oliff joined the Center as a Policy Analyst with the State Fiscal Project and his work includes tracking state revenue collections and property tax issues, among other areas.

Full bio | Blog Archive | Research archive at CBPP.org

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