U.S. Chamber study highlights business-friendly state efforts

States are tackling their budget problems by streamlining operations, cutting spending, and hiking taxes, according to a new study from the US Chamber of Commerce.

The business lobby released the study in conjunction with its governors summit, and used the opportunity to suggest states that offer a business-friendly climate will recover faster than others.

"When it comes to job growth, where the rubber meets the road is at the state level,” said Thomas J. Donohue, president and CEO of the chamber. “Companies, capital, and jobs go where they are welcome."

“Ultimately, there is only one route to sustainable state economies, and that is through broad-based economic growth,“ wrote study co-author Joel Kotkin.

States had weathered the first few years of the economic downturn with significant assistance from the federal government. But with the Republican resurgence and subsequent deficit focus, help from Uncle Sam going forward will be "meager at best," the chamber said.

And with fiscal situations remaining "dire" in the chamber's view, states are considering a wide range of options to help shore up their books.

The study found that many states were tackling budget gaps by redesigning government, consolidating and streamlining operations to cut costs and improve efficiency. For example, many states are putting more services online and shifting away from costlier brick-and-mortar assistance. Tapping the private sector via public-private partnerships or wholesale privatization is also an option on the table for many states.

Cutting spending is also a common approach by states, as many lay off workers, freeze hiring, and cut spending for other services. In addition, entitlement costs from public pension funds and health insurance are also being considered.

On the revenue side, many states have eliminated tax exemptions, broadened tax bases, and increased rates and fees to bring more money into state coffers. Increases in all major taxes have been seen in states nationwide. But the chamber also sought to highlight states that have cut business taxes in an effort to entice private sector investment within their borders.

Along similar lines, some states are also looking to trim regulations, or conduct studies to determine the impact on jobs and business costs of any new rules being considered.

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