LITTLE ROCK — The state House Republican leader’s latest version of legislation to limit the growth in state spending cleared a House committee Tuesday in a party-line vote.
Under House Bill 1041, state expenditures couldn’t climb faster than the growth of Arkansans’ paychecks.
If it becomes law, state spending increases would be tied to the average growth of the state’s disposable personal income over the previous five years.
The sponsor, Rep. Bruce Westerman, R-Hot Springs, said his bill would allow the lawmakers to responsibly control the growth of state government and improve on the state’s Revenue Stabilization Act, which distributes general revenue to state agencies.
The bill sends a message to Arkansans that ‘“if you don’t have money to spend, then we are not going to spend money, and it gives us an incentive as a state to put more disposable income in the pockets of Arkansas taxpayers,” he told the House Revenue and Taxation Committee.
Overall, 11 Republicans voted for the measure and five Democrats voted against it.
Although the bill wouldn’t become effective until July 1, 2014, the Legislature could choose to follow the spirit of the measure for the fiscal year starting July 1, Westerman said.
Governor Mike Beebe, a Democrat, has proposed a 4.6 percent increase in the state general-revenue budget for fiscal 2014, and the bill would have limited that increase to 3.8 percent if it was in effect, he said.
The expenditure limit would apply only to net general-revenue spending. It wouldn’t apply to general revenue transferred or credited to the state’s General Improvement Fund or one-time expenses for the settlement of claims against the state or a state entity under the bill.
The bill would allow the director of the state Department of Finance and Administration to authorize an expenditure exceeding the cap if the expense is an emergency, the governor recommends the expense and either the Legislative Council or Joint Budget Committee approves it.
Westerman’s original bill would have limited the growth in general-revenue expenses to no more than 3 percent over the previous fiscal year’s expenses. In a recession, the growth could’ve been even lower.
He said his original bill wouldn’t have given the state much flexibility nor an incentive to promote the growth of the state’s economy. Someother states have already linked the growth of state spending to increases in total personal income, he added.
Richard Weiss, director of the state Department of Finance and Administration, told the committee that the state’s Revenue Stabilization Act has made sure that Arkansas was one of only five states that “did not go belly up during the recession.”
In the past dozen years, the annual change in the state’s general-revenue expenses has ranged from a 0.36 percent reduction in fiscal 2010 to a 7 percent increase in fiscal 2004, he said.
The state has used conservative general-revenue forecasts that have led toconservative state budgets, Weiss said.
After Tuesday’s vote, Beebe, who called Westerman’s original bill “awful” two weeks ago, said the legislation is unnecessary because the Legislature already can limit state spending each year through the Revenue Stabilization Act.
“They don’t need to artificially restrict themselves,” he told reporters.
“We have the best budget system in America,” one that’s won praise from former California Republican Gov. Arnold Schwarzenegger, Beebe said.
“Why do they want to monkey with it after it has been good for 70 years? And some guy that has been here a little while and wants to change something like that because he doesn’t like what’s going on in Washington?” said Beebe, who served in the state Senate for 20 years, as attorney general from 2003-2007and as governor since 2007.
Westerman has served in the House since 2011.
Last April, House Republicans, led by Westerman, said they would cap or slow the growth rate of state government if they won control of the House in the November general election.
Now that Republicans control 51 of 100 House seats and 21 of 35 Senate seats, Westerman said he wants his party to keep its promise.
Front Section, Pages 5 on 02/27/2013