State and local governments are sharply cutting spending in an effort to close large budget gaps. The cuts reduced economic growth in the October-December quarter last year, the Commerce Department said Friday. The cuts are likely to drag on growth for the rest of this year, some analysts say.

There are several ways state and local spending cuts can slow economic growth, according to Jon Shure, an analyst at the liberal Center on Budget and Policy Priorities. Layoffs and other job losses lower consumer spending, which powers 70 percent of the economy. Cuts in benefit programs also reduce recipients' ability to spend. And cuts in education spending can impact longer-term economic growth by lowering skills in the work force.


— South Carolina state legislators on Thursday approved a spending plan that cuts Medicaid reimbursements for doctors and hospitals. That could cost hospitals 2,600 jobs, the state hospital association estimates.

— New Jersey's cuts to afterschool programs will likely eliminate 1,100 jobs, according to the CBPP.

— Tennessee has eliminated over 2,000 positions, or 5 percent of the state's work force, mostly through buy-outs.


— Michigan has cut funding for its job training and education program, known as No Worker Left Behind, by 38 percent.

— Pennsylvania is poised to let a subsidized health insurance program for 41,000 lower-income adults end Monday, saying there isn't enough money for it to continue.

— Minnesota has cut cash bonuses for people successfully transferring from welfare to work.


— Florida has raised tuition at its 11 public universities by a total of 32 percent in the past two years.

— Arizona has eliminated preschool for 4,328 children.

— Hawaii shortened the 2009-2010 school year by 17 days.