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House approves constitutional spending limit

House approves constitutional spending limit

January 20th, 2012 in News

Increases in state government spending would be limited under a constitutional amendment endorsed Thursday by the Missouri House.

Annual increases would be capped at a growth limit that is the sum of the annual rates of inflation and population change, plus 1.5 percent of the revenue collected by the state in the previous year. Extra revenue would go toward state debts and into budget reserves. Eventually, money could be returned to taxpayers through a tax cut.

Lawmakers are spending this year cutting budgets and looking to fill an estimated $500 million budget gap, but the proposed constitutional amendment envisions happier fiscal times with budget boosts going to state programs. Similar spending limits have been proposed in recent years, but majority House Republicans have made it a priority this year.

Sponsoring Rep. Eric Burlison said spending limits would lessen periodic budget spikes by moderating increases in good years and damping cuts when money is tight.

"This is going to make sure that we continue to have more stability in the future so that in the lean years there may be some money that we can have that can shore up those funds, keep the expenditures stable," said Burlison, R-Springfield.

The House approved the measure 105-54, which sends the constitutional amendment to the state Senate. If approved by the Legislature, the spending cap would go for a statewide vote. Debate broke largely along partisan lines, with Democrats arguing the measure would make it harder to react to new situations and Republicans asserting that it would help control state spending.

Two Democrats joined the GOP in supporting the measure. Rep. Chris Kelly, who previously served in the Legislature and was the Budget Committee chairman when Democrats controlled the chamber, strongly defended the spending limits during floor debate this week. Kelly, of Columbia, said opponents spoke in generalities without demonstrating specifically where the harm would arise.

"I believe that this resolution will in fact provide more money in a slower and gradual rate of increase than the current way we are governing," he said.

Critics said legislators should be trusted to govern and make wise budget decisions. They said constitutional spending limits could make it harder to boost funding for social services, education, economic development and other important programs. Rep. Jill Schupp said the measure should be called the "R2D2 bill" because it took the decision-making authority away from elected officials.

"We didn't come here as robots put on autopilot to have some formula make the decisions for us on how to best utilize the funds for the state of Missouri," said Schupp, D-St. Louis

The spending cap would apply to the state's general revenue over which lawmakers have the most discretion and not to funds from the federal government and other sources that often must be used for a specific purpose in the budget. In addition, revenue from new taxes or fees would not be counted and additional money plugged into a state school funding formula that is several hundred million dollars short would not count against the spending cap.

If the money collected by the state exceeds what may be spent, it first would go toward paying some state debts. Revenues then would be split between three budget funds. After those accounts reach certain limits, the money would be used to reduce the state's income tax rate by at least 0.25 percent.

The spending limits also are supported by former Republican House budget writers Carl Bearden and Allen Icet. The former lawmakers contend it is difficult to force the Legislature to prioritize its budget and avoid significant spending increases when state revenues start improving.

"The Legislature as a whole has demonstrated their inability to do that unless forced to," Bearden said.

Opponents from outside the Legislature said the Missouri Constitution already limits how much revenue the state can collect and that makes a restriction on what can be spent unnecessary. The Missouri Budget Project, which analyzes financial issues with an emphasis on their effect on the poor, said the new measure would pit services for seniors against education and economic development.

"The risks inherent in a constitutional spending cap would make it more difficult for Missourians to obtain quality educations and compete in the global economy," said Amy Blouin, the organization's executive director.