LITTLE ROCK — A proposed spending cap that Gov. Mike Beebe said threatens to “wreak havoc” on a state budgeting system he called the envy of the country cleared its first legislative hurdle Tuesday.
The House Revenue and Taxation Committee endorsed House Bill 1041, which would set a year-to-year cap on state spending growth.
The bill 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.
Since the bill was originally filed, Westerman has added language stating that in the event of an emergency, the governor could ask legislators to approve an expenditure that would exceed the cap.
Westerman acknowledged that the Revenue Stabilization Act, the mechanism by which the Legislature sets annual spending priorities, prohibits the state from spending more than takes in, as is required by the state constitution. But he said general-revenue spending has increased by as much as 8.5 percent from year to year in the past decade and called that “phenomenal.”
“What (the bill) would allow us to do is to smooth out any sudden changes,” Westerman, the House majority leader, told the committee.
Officials with the state Department of Finance and Administration testified against the bill.
“If the Legislature desires to limit funding to any specific amount calculated by formula or otherwise, it has the authority and responsibility to do that under the constitution,” said DF&A Director Richard Weiss.
Weiss said that if the Legislature were to approve appropriations that would exceed the cap, it would be up to the DF&A director to make cuts under Westerman’s bill. That would violate the constitutional doctrine of separation of powers, he said, because the Legislature has the responsibility of determining appropriations and spending.
Weiss also said the bill is so vaguely worded that it is unclear how exactly the cap would be calculated.
Westerman said the bill would not take any authority away from the Legislature. He said that if DF&A had to make cuts, it would do so according to the spending priorities established by the Legislature.
“This is not at all a conflict with RSA, but it’s a complement to RSA,” he said.
Rich Huddleston, executive director of the nonprofit group Arkansas Advocates for Children and Families, testified against the bill. He said a cap on spending growth enacted in Colorado resulted in severe cuts in areas such as public health, education and infrastructure, prompting voters to suspend it with the support of the business community.
“We are really concerned long-term what this might do to programs serving vulnerable children and families,” Huddleston said.
The bill was endorsed on a voice vote by the committee, which is comprised of 15 Republicans and five Democrats. Some “no” votes were heard.
Talking to reporters later, Beebe called the bill “awful.” He noted that Arkansas was one of only four states that did not run a deficit during the recent recession.
“I think it has the potential to wreak havoc with the best budget system in the county. I don’t think you throw away 60-some years of the best budget system,” he said.
But Beebe would not say whether he would veto the bill if it reaches his desk.
The bill goes next to the House floor. House Speaker Davy Carter, R-Cabot, said Tuesday he supports limiting government spending. He said he would talk with Beebe about his concerns.
“Nobody’s trying to wreak havoc on anything,” Carter said.