New Study Outlines the Road to Economic Recovery for States: Utah Still Leads, While New York Suffers

WASHINGTON, April 7 /PRNewswire-USNewswire/ -- As states face their toughest budgetary climates in a generation, the authors of a new report by the American Legislative Exchange Council (ALEC) point out what states should do to alleviate the fiscal pain, and also what they should avoid. The third edition of Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index shows how many states responded to the economic crisis with higher taxes, new spending, and more debt. Instead of continuing down this road to a financial meltdown, the authors outline the steps states can take to bring about economic recovery.

(Logo: http://www.newscom.com/cgi-bin/prnh/20091014/ALECLOGO)

"Many state legislators across America are taking the wrong actions to improve their economies," said Indiana State Sen. Jim Buck, Chairman of ALEC's Tax and Fiscal Policy Task Force. "As elected officials, we must be exceedingly vigilant to avoid tax increases, which would only prolong the current downturn for states."

Co-author and renowned economist Dr. Arthur B. Laffer summarized the report's findings when he said, "Tax and economic policies are essential to the competitiveness of our states. Most actions being taken in state capitals today -- and practically all actions from Washington, D.C. today -- are flat-out wrong." Rich States, Poor States presents state economic outlook rankings based on public policies that have a proven impact on growth, revealing which states have the best chance of experiencing economic recovery, and which need to re-examine their policies before they can expect to see improvement.

Laffer and his co-authors, Stephen Moore, senior economics writer at The Wall Street Journal, and Jonathan Williams, director of ALEC's Tax and Fiscal Policy Task Force, analyzed how economic competitiveness drives income, population, and job growth in the states. They found that states with a high and rising tax burden are more likely to drive away individuals and business, while those with lower and falling tax burdens are more likely to attract businesses and create jobs.

"The tax-and-spend attitude in Washington, D.C. is making the problem far worse for states," Moore said. "Once the federal stimulus dollars dry up, only federal requirements will remain -- and states will be left with bloated programs they are no longer able to afford."

Indeed, in pointing out the negative effects of expansive government policies, Rich States, Poor States highlights states that have lost population and business because of oppressive taxes and spending.

"The correlation between poor policy and poor economic results is indisputable, just look at California, New Jersey, and New York," Williams said. "Our research shows that states with responsible spending and competitive tax rates enjoy the best economic outlook. States do not enact changes in a vacuum – every time they increase the cost of doing business in their state, their state brand immediately loses value."

To read more about the state-to-state comparisons, see the individual state analysis, and view the full report, download it for free at www.alec.org.

The American Legislative Exchange Council (ALEC) is the nation's largest nonpartisan individual membership association of state legislators.

SOURCE American Legislative Exchange Council

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