The national recovery since the end of the Great Recession has been needlessly held back by spending cuts at all levels of government. Figure A below compares the growth in per capita spending by federal, state, and local governments in this recovery with previous recoveries.

As tight as federal spending growth has been in recent years, the bulk of the differences between the current recovery and previous ones shown in Figure A actually stems from state and local spending decisions. These state-level spending cutbacks have held down growth substantially.

States, unlike the federal government, are generally constrained in their ability to boost spending by the need to raise revenue. But as a general rule, government spending boosts economic activity in a weak economy more than tax cuts drag on activity. (In economist jargon, spending increases have higher “multipliers” than revenue increases.)

Measure 97, which is on the Oregon ballot this year, gives Oregon voters the chance to invest in just such a boost to spending on education, health and senior services. These voters should approve it.

Measure 97 would change Oregon’s corporate minimum tax by placing a 2.5 percent gross receipts tax on corporate sales over $25 million. It is forecast to provide roughly $6 billion in funds between 2017 and 2019 that are dedicated for investments in health, education, and senior services. These investments would be most welcome for Oregon.

Oregon’s unemployment rate sits at 5.5 percent, compared to the national unemployment rate of 5 percent. Further, it has drifted up over the past year. As Figure B shows, much of this ongoing weakness in the Oregon labor market stems from weak local government employment, a sector dominated by public school teachers. As Measure 97 will free up resources to spend on public education, there will be near-immediate impacts in boosting the Oregon labor market.

This short-run economic improvement alone would be a compelling reason to vote for Measure 97. However, as other backers of Measure 97 have noted, the benefit of public investment—particularly spending on education— goes well beyond simple short-run stimulus. In Oregon, increased public investment is needed to reverse a disturbing long-run trend in reduced state and local government spending. The cuts to local government jobs highlighted above have resulted in Oregon having one of the highest student/teacher ratios (and hence most crowded classrooms) in the country. And too often outcomes have reflected this failure to invest— even with some recent improvements Oregon has one of the worst on-time high school graduation rates in the country. Given that public education spending relies overwhelmingly on these state and local budgets, reversing this trend is crucial to sustaining valuable investments in America’s children. The value of public education as an investment is beyond dispute.

For example, a recent paper in the Quarterly Journal of Economics used data from California ballot measures that allowed increases in school spending and found that approving these ballot measures helped solve a clear underinvestment in school facilities. They found that each extra $1 of school spending made possible by such ballot initiatives led to a $1.50 increase in home prices for the affected school districts, and were also accompanied by rising test scores for students.

Another recent academic paper examined data from a wave of post-1990 school finance reforms that boosted per pupil spending. The authors find that these reforms “cause increases in the achievement of students in these districts, phasing in gradually in the years following the reform. The implied effect of school resources on educational achievement is large.”

Finally, as a matter of state policy, public investments have been shown to be much more promising in fostering economic development than focusing on low business taxes. As Robert Lynch demonstrates in a 2004 book, Rethinking Growth Strategies: How State and Local Taxes and Services Affect Economic Development:

“In particular, there is little evidence that state and local tax cuts—when paid for by reducing public services—stimulate economic activity or create jobs. There is evidence, however, that increases in taxes, when used to expand the quantity and quality of public services, can promote economic development and employment growth.”

Politicians and policymakers often like to engage in plenty of rhetoric about the importance of education as an investment. Measure 97 lets the voters of Oregon show that they think this rhetoric should be backed up by concrete policy changes.