LITTLE ROCK — The sponsor of a bill to set a cap on year-to-year growth in state spending says he is working to address objections to the bill that critics have raised, but the governor and the state Department of Finance and Administration director say tweaking the bill will not stop what they consider bad legislation better.
House Bill 1041 by Rep. Bruce Westerman, R-Hot Springs, would require that total general-revenue expenditures increase from one fiscal year to the next by no more than 3 percent or the average percentage of increase in the gross domestic product over the preceding three fiscal years, whichever is smaller.
In the event of an emergency, the bill would allow the governor to ask lawmakers to approve an expenditure exceeding the cap.
One of the objections that finance officials have raised about the bill is that it does not make clear whether the cap would apply to gross general revenues or net general revenues. Westerman, the House majority leader, said last week he will amend the measure to clarify that the cap would apply to net general revenues, or the revenues available after the state pays out tax refunds and other obligations.
The amendment also will clarify that net general revenues transferred to the General Improvement Fund are not included in the cap and will clarify some of the language regarding emergencies, he said.
Westerman said the argument that his bill is unclear on what revenues the cap would apply to is a valid argument, but he was less impressed with other complaints he has heard about the bill.
“The rest of it I think is mainly just political rhetoric,” he said.
Beebe said Friday he had not seen the amendment, but he said the bill has many other problems besides vagueness.
“I don’t like that bill because we’ve had for 70-something years what most people around the country consider the most conservative and best and most responsible budgetary system in the country,” he said. “It’s been reflected throughout the course of those 70-some-odd years. The system is not broken.”
He also said the Legislature already has the ability to control spending.
“They can already limit whatever gets spent or cut government any way they want to cut it through the regular budget. That’s their responsibility and they do that,” he said.
DF&A Director Richard Weiss said Westerman’s amendment would not change his opposition to the bill.
“It’s not palatable, really, either way,” he said.
The bill would not take effect until July 1, 2014, but Weiss said that if it were in effect now some programs would have to receive less than they received last year. He said K-12 education must be funded at a court-mandated level of adequacy, and Medicaid has a shortfall that Beebe has proposed using one-time money to help plug, so other programs would take a disproportionately large hit.
“Instead of giving all the colleges and universities (an increase of) $8 million, for example … looking at it on just this year’s basis, you would have to cut into not only the growth that the governor gave them but cut into the base level,” he said.
Weiss also said the bill would require the DF&A director to decide what does not get funded if the Legislature approves spending that exceeds the cap, which he said may be unconstitutional because it is the responsibility of the legislative branch, not the executive branch, to set funding levels.
Beebe said he understands what the motivation was for filing the bill.
“They’re mad at Washington, and you know, Washington might need something like that. Arkansas doesn’t. If this bill becomes law they’re messing up the best budget system in the country,” the governor said.
Westerman said his bill would not require funding any program below base level. He said Arkansas’ general-revenue budget has decreased before, “and as far as I know nobody got turned out of prison and people didn’t lose their jobs.”
Westerman said the bill is not unconstitutional because the DF&A director already makes decisions about spending, using the priorities set by the Legislature through the revenue stabilization process as a guide. He said the director could use the same priorities in deciding how to keep the state within the cap, if necessary.
He denied that the bill is about anger at Washington, saying that “fiscal responsibility is what’s behind it.”
Westerman said he planned to amend his bill in the House on Monday and likely would present it for a vote on Wednesday. He said he was confident it would pass in the House, where 45 of the 100 members have signed on as co-sponsors.
He said the Beebe administration has been “putting a lot of pressure on folks on the bill,” but no supporters have told him they are withdrawing their support and no co-sponsors have asked to have their names taken off the bill.
House Speaker Davy Carter, R-Cabot, said he supports limiting the growth of government but he acknowledged that “people that are … familiar with the budget process do have some concerns.”
“It’s an awfully difficult thing to do, to try to contemplate all of the things that may or may not happen sometime in the future and how that affects the bill and the intent of the bill. I’m thinking through all of that,” he said.
Rep. Duncan Baird, R-Lowell, co-chairman of the Joint Budget Committee, said he is undecided on the bill. The committee’s other co-chairman, Sen. Larry Teague, D-Nashville, said he is against it.
“We pay our bills, we’re not in debt. The budgeting process works very well,” Teague said. “I understand what Bruce is trying to do, but I just don’t think it’s necessary.”
Reporter Rob Moritz contributed to this report.