Despite some of the positive indicators of economic growth released by the Bureau of Labor Statistics in its December jobs report earlier this month, state and local governments continue to struggle and face difficult decisions regarding spending cuts that will affect local communities, working families and business.

State Governors, many of them new to Executive Office, are kicking off their General Assembly Sessions, preparing their State of State Addresses, and are beginning the budget approval process this month.  These Governors and public policy leaders are struggling with slow economic recovery and declining tax revenues, budget deficits and an end of federal stimulus dollars that have filled many holes in state budgets through fiscal year 2011.  Looking towards fiscal year 2012 and beyond, states will have to make tough choices on spending cuts that will impact families and reduce basic and necessary services.

According to a report by the Center on Budget and Policy Priorities titled, “An Update on State Budgets” (November 2010),

“…Cuts enacted in at least 46 states plus the District of Columbia since 2008 have occurred in all major areas of state services, including health care (31 states), services to the elderly and disabled (29 states and the District of Columbia), K-12 education (34 states and the District of Columbia), higher education  (43 states) and other areas.”

How do these cuts impact working families and businesses?

According to the Center, when states cut spending,

  • local governments are further restricted;
  • employees are laid off;
  • contracts with vendors, many small businesses, are canceled;
  • payments to businesses and nonprofits are reduced; and
  • benefit payments to individuals, who are the most vulnerable, are cut.

All of these repercussions affect the “purchasing power of working families, which in turn affects local businesses and slows recovery.”

In a recent online forum entitled, Quality Counts 2011: Education’s New Economic Reality, hosted by Education Week, Don Boyd, senior fellow at the Nelson A. Rockefeller Institute of Government, the public policy research arm of the State University of New York at Albany, wrote:

“It [the economic crisis] is not going away quickly, and the cavalry is not coming . . . This means that states and districts need to think about how they can develop long-term plans to address declines in revenue and large rising cost pressures.”

State and local governments must begin to creatively think about how to approach and deal with these tough budget decisions.  They must begin to think long-term about how to change the way they do business in terms of alignment of programs, ensuring the best results for their investments, and collaborating with multiple sectors to think of new and innovative solutions.

Because the economic crisis effects all stakeholders in the community, one approach would be to have state and local governments, business and community leaders do a better job of:

  • working together to develop common goals focused on improving the lives of working families, such as ensuring that all youth in the community are ready for college, work and life;
  • becoming more transparent about future needs, and
  • breaking down barriers to communication.

Corporate Voices specifically works to bring business to the table in these conversations and provides community and business leaders with tools on how to better engage each other in sustainable and mutually beneficial partnerships.  The Supporting the Education Pipeline: A Business Engagement Toolkit for Community-Based Organizations, developed with the support of the Ready by 21 National Partnership, highlights the Louisville, Kentucky community and their engagement efforts with business.  Additionally, in partnership with the Bill and Melinda Gates Foundation, a recently published report entitled From an “Ill-Prepared” to Well-Prepared Workforce: The Shared Imperative for Employers and Community Colleges to Collaborate highlights business and community-college partnerships.

By working together, leaders can help those working families most often affected by this economic crisis: low-wage workers.  Corporate Voices continues to work with businesses, policy makers and non-governmental organizations to help create a better understanding about public and private resources that increase job opportunities, improve financial stability, build assets and enhance productivity involving lower-wage employees.   Through research, practical EITC and workplace lactation toolkits, modeling of corporate best-practice initiatives, and media and legislative outreach Corporate Voices continues to spotlight policies that benefit employees and their families, while also contributing to the business bottom line.

Working together across sectors can help state and local governments access and collaborate on new solutions to their budget crisis to work toward improving the lives of working families.

Our current jobless recovery and the state funding crisis is affecting all leaders– from the federal government to local government, from businesses to schools, and most importantly, working parents and their children.  Leaders must work together to develop innovative solutions and creative ways to approach the tough fiscal climate that lies ahead.