GOP bill would link outlays to state GDP

Arkansas House Republican leader Bruce Westerman said Friday that he wants to slow the growth of state government spending under legislation that he filed this week.

But the state’s chief fiscal officer, Richard Weiss, said Westerman’s legislation is unconstitutional and, if enacted into law, would severely affect operations of the Arkansas State Police and the Department of Correction in the next fiscal year.

But Westerman of HotSprings countered that he believes his bill, drafted by attorneys in the Bureau of Legislative Research, is constitutional and that it isn’t designed to hurt key programs, such as law enforcement or prisons.

“It is not cutting anything,” he maintained. “It just slows the rate of growth.”

At issue is Westerman’s House Bill 1041 - a bill that 29 other House Republicans and five Republican senators are co-sponsoring.

Last April, House Republicans said they would cap or slow the growth rate of stategovernment if they won control of the House.

Now, Republicans control 51 of 100 House seats and 21 of 35 Senate seats.

Under Westerman’s bill, state general revenue spending increases would be capped. They could rise no more than 3 percent above the previous year’s state general revenue expenses.

And the growth of state general revenue spending couldn’t outpace the growth of the state’s Gross Domestic Product - the value of all the goods and services producedin the state - over the previous three fiscal years.

Under the legislation, the director of the state Department of Finance and Administration, who is the state’s chief fiscal officer, would be responsible for ensuring that the spending caps were followed.

Westerman said that the aim of his bill is to slow the growth of state general revenue spending, so state government is not growing faster than the state economy and to make Arkansas more fiscally sound.

He estimated his bill would have saved about $250 million a year over the past decade if it had been in place.

If approved, the law wouldn’t affect the state’s budget in Fiscal Year 2014, but would kick in the following year, Westerman said. But the bill includes a provision that states it’s necessary to control spending in fiscal 2014. The bill says it would go into effect July 1.

Brandon Sharp, the state’s budget administrator, estimated the bill would have saved at least $589 million if it had been in place since 2003 based on limiting the growth of state general revenue expenses to 3 percent each fiscal year.

From fiscal 2002 to fiscal 2012, such expenses increased by more than 3 percent six times, according to state figures. These expenses increased from $3.2 billion in fiscal 2001 to $4.5 billion in fiscal 2012.

Gov. Mike Beebe, a Democrat, has been governor since 2007. But Beebe is unsure why the Republican-controlled Legislature would need to enact such a bill because lawmakers already have the power to control state general revenue spending, said Beebe spokesman Matt DeCample.

The state’s general revenue budget is $4.727 billion in fiscal 2013, which ends June 30, and Beebe has proposed a budget of $4.947 billion in fiscal 2014, which begins July 1, including $10 million in rainy-day funds, Sharp said.

Weiss said the bill delegates the responsibility for determining expense levels to the state’s chief fiscal officer - contrary to appropriation and funding laws enacted by the Legislature - and it also violates the Legislature’s constitutional responsibility to appropriate money and set funding levels.

Westerman said his legislation wouldn’t shift responsibilities or transfer power from the legislative to the executive branch.

“I think the new plan will be just the opposite of this with the chief financial officer playing less a role in determining the budget and the Legislature taking on a greater role in setting priorities.

“Our current budget is no more than [the Finance Department’s revenue forecast] divided into areas the governor wants it to be spent,” he said. “The chief fiscal officer’s role under the new plan would be to simply report the GDP numbers for the state.”

Weiss said the legislation, if enacted, would dramatically reduce Beebe’s proposed budget for fiscal 2014 and would interfere with key government services.

“Lowering spending levels, which are set by the Legislature in the Revenue Stabilization Act, would severely jeopardize critical government areas such as prisons and state police,” Weiss said. “This is so because the so-called ‘doomsday clause’ maintains education spending at the expense of other programs even if expenditure levels are cut below those established by the Legislature.”