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State Economies Stand to Gain from American Jobs Act

“It's a no-brainer: Congress should pass the bill. Now.” That’s how California Gov. Jerry Brown characterized the decision facing Congress on whether to pass President Obama’s $447 billion American Jobs Act, the legislative language of which was released in full this week. Gov. Brown’s reaction was not unique amongst state officials around the nation, dozens of whom have come out in strong support of the bill. As reports around the nation this week indicated, state economies stand to benefit significantly from the boost that would be provided by direct funding in the bill allowing them to put construction workers back to work rebuilding crumbling schools and infrastructure, and to make sure teachers, firefighters, and cops in their communities stay on the job.

In addition to $253 billion in tax cuts and credits, the text of the legislation sent to Congress this week also provides critical aid to states still struggling with revenue shortfalls to directly create jobs, including $30 billion to hire and prevent further layoffs of teachers and $5 billion to hire and prevent further layoffs of law enforcement officers and other first responders. The aid would be directly targeted towards job creation. Language in the bill specifies that states would be prohibited from using the funds to either support rainy day funds or to reduce debt obligations, and requires that states receiving grants for hiring teachers provide reports on how many jobs were saved or created by the measure. This move also happens to be very popular with voters — in a CNN poll released this week, 70 percent of independent voters voiced support for direct state aid to boost the economy and create jobs.

If the results of the Recovery Act are any guide, this direct aid would result in significant benefits for states and localities. The Department of Education estimates that the state aid in the 2009 stimulus package resulted in 400,000 teachers keeping their jobs who would have otherwise lost them. Despite the successes of the Recovery Act, more action has long been needed, as losses in state and local government employment have been one of the most significant drags on an economic recovery that has largely stalled. As the Center on Budget and Policy Priorities notes, local education jobs fell by an alarming 293,000 over the last three years, with losses accelerating rapidly in recent months, cancelling out any private sector job growth. Urging a crowd in Columbus, Ohio this week to ask their representatives to pass the jobs bill, President Obama himself highlighted in how “budget cuts are forcing superintendents here in Columbus and all over the state to make layoffs they don’t want to make... it is unfair to our kids, it undermines our future, and it has to stop.”

According to Moody’s, the aid to states alone would create approximately 135,000 private and public sector jobs in 2012, as part of the 3-4 million expected to be created as a result of the entire package over the next two years. As state media around the nation picked up on this week, this would have a much needed positive impact in local communities. For example:

  • Texas schools would stand to receive $2 billion, including $39.1 million for Arlington, where an official commented that its passage “would be great news” for his city.
  • As NPR’s State Impact reports, Ohio would receive $1.1 billion to pay teachers and first responders Gov. Kasich offered some initial “lukewarm” support for the White House effort.
  • And schools in Arizona would receive $661 million, which would be a “welcome relief” according Michael Kearns, president of the Arizona Community College Presidents Council.

Other language in the American Jobs Act would also place states at the center of job creation. States would be eligible to apply for funds from an appropriation of $25 billion intended to modernize, renovate, and repair public school buildings. They would also be able to apply for grants from a $15 billion appropriation intended to create jobs and stabilize neighborhoods by rebuilding vacant and foreclosed homes and businesses. New funding for job training programs would also see states as critical partners.

In addition, the jobs package builds on some legislative successes that are already underway in the states. As Progressive States Network highlighted in a blog post last week, two key proposals to ensure job security that were included in the American Jobs Act have already been moving in states across the nation: work-sharing, which was passed unanimously in Maine this past session and has been successful in other states, and the banning of employer discrimination against the long-term unemployed, which was introduced in New York and Michigan and enacted in New Jersey this year. In many states, both of these policies have seen broad, bipartisan support, and both help protect workers against the devastation of long-term unemployment.

The bill is fully paid for by eliminating tax expenditures and closing some tax loopholes. However, it is worth noting that the full language of the bill specifically notes that if the so-called Congressional “Supercommittee” tasked with deficit reduction efforts as a result of the debt ceiling deal increases their achieved cuts to cover the full cost of the American Jobs Act, none of the revenue-raising measures in the bill will take effect. This should be a continued concern for states worried about whether essential parts of their social safety nets, like Medicaid, will ultimately be on the chopping block in order to pay for job creation, instead of asking large corporations and the wealthy to pay their fair share in a time of historic income inequality.

The White House has released state-by-state fact sheets on the impact of the American Jobs Act in all 50 states.

This article is part of PSN's email newsletter, The Stateside Dispatch.
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