House Revenue Panel Clears Spending Cap Measure

The House Revenue and Tax Committee spent an hour-and-a-half on Tuesday debating a bill to cap state spending before sending the measure on to the full House.

HB 1041 by Rep. Bruce Westerman (R-Hot Springs) proposes to limit state spending growth to the state’s GDP.

In presenting his measure, Westerman, the House Majority Leader, said that the Revenue Stabilization Act (RSA) that has guided lawmakers’ budgeting since the 1940’s hasn’t solved the state’s spending issues.

“We can be more fiscally responsible than we’ve been in the past,” Westerman said. “I’m not putting blame on one party or another. These are just the facts.”

Westerman asserted that state expenditure growth had grown at almost 2.5 times the state’s GDP during the last decade and that by tying spending to GDP levels, the state could have saved an average of nearly $250 million a year.

Gov. Mike Beebe has described the measure as “awful.” His director of the Department of Finance and Administration Richard Weiss outlined several concerns about the bill, including its constitutionality.

Weiss said the bill cedes spending controls to his office, and in essence, shifts legislative budgeting to the executive branch of government.

He also expressed concern that GDP data is calculated on a calendar year basis, while state budgeting is done from July 1 to June 30. Weiss contended that this lag would make budgeting difficult. He also explained that GDP numbers are eventually revised – up and down – which would complicate the triggers in HB 1041.

Westerman disagreed.

“I believe this would be a better tool for budgeting and better for agency directors planning for their budgeting,” he said.

With 15 Republican members on the 21-member House Revenue and Tax Committee, the bill passed on a voice vote.