With the projected state budget deficit topping $3.7 billion, both North Carolina’s Democratic governor and the General Assembly’s Republican leadership are intent on cutting state jobs, but financial analysts say that will only worsen the state’s economy.

A new study from the NC Budget and Tax Center says that cutting along the lines proposed by the state’s leadership would eliminate more than 21,000 positions, or 7.4 percent of the current state government workforce.

In addition, the private sector would lose jobs as the state cuts back on contracts with private vendors, the report said.

Alexandra Forter Sirota, director of the NC Budget & Tax Center and author of the report, said the state must look at closing the deficit by raising revenue rather than by cuts alone.

“Job creation has to be our leaders’ top priority,” Sirota said in a news release that announced the report. “Preserving jobs and the vital public structures that support growth is absolutely fundamental to economic recovery.”

Sirota’ concern is shared by John Quinterno, of South by North Strategies, a North Carolina research firm specializing in economic and social policy.

Quinterno said the state’s priority should be on keeping people employed and getting the unemployed back to work in order to fuel the consumer spending the drives the economy. Cutting public employees and cutting off vendors who rely on public contracts will only dampen demand and further slow the economy, he said.

The latest statistics show the state lost 12,500 jobs in November and the workforce, shriveled by the effects of long-term unemployment, is now smaller than it was in four years ago.

“North Carolina’s labor market still has not turned a corner,” Quinterno said. “At a point in the business cycle when prospects should be improving, they instead have worsened.”