A resolution that would limit the growth of state spending got its first hearing in the House Budget and Fiscal Affairs Oversight Committee last week. House Resolution 305, sponsored by Republican Trey Kelley of Cedartown, would use changes in the consumer price index and state population growth to cap the amount of money lawmakers could put into the following year’s budget. If revenues exceed the capped amount, they would be deposited to the state’s reserve fund, or returned to taxpayers in the form of a rebate. In order to spend more than what would be permitted under the growth formula, legislators would have to pass a standalone resolution approved by two thirds of House and Senate.
In the hearing, Rep. Kelley explained the bill as a common sense measure that tries to make sure the Georgia of the future is as great as what the state is enjoying today. Committee Chairman Chuck Martin of Alpharetta said that the bill’s limit on appropriations would be a good companion to the constitutional amendment passed by voters last year capping the income tax rate.
The proposed legislation is a version of the Taxpayer Bill of Rights that has been proposed in several state and local governments, but has only been approved at the state level in Colorado. And while the measure limits the rate of increase of the budget, it does nothing to ameliorate a decrease in the case of a recession. As a result, if state revenue should drop one year due to a difficult economic situation, the resulting lower spending level mandated by the requirement to balance the state’s budget would become the baseline for the following year’s budget increase, even if revenues were to increase to pre-recession levels.
This “ratchet down” effect is one potential drawback to the bill. According to Taifa Butler, the Deputy Director of the Georgia Budget and Policy Institute, HR 305 would place rigid restrictions on spending that would cripple investments in transportation and education. Speaking as a witness at the committee meeting, Butler said the bill tries to address a non-existing problem, noting that the Peach State is 46th in state and local revenue per person, and ranks in the bottom five in many spending categories. She also pointed out that some of the things the state provides money for, including school enrollment and Peachcare have been growing faster than the general growth in population.
Rep. Kelley said that he deliberately tried to make the bill less rigid than the TABOR used in Colorado, where a citizen referendum was originally required to allow for spending beyond what that state’s TABOR mandate. The fact that a two thirds vote by the legislature can override the spending limit makes his bill different than the one in Colorado, where the ratchet down effect eventually forced the state to develop a less restrictive model. And Rep. Martin agreed that a more precise measure than population increase and the growth in the Consumer Price Index may be necessary to prevent unforseen consequences.
No committee vote was taken on Rep. Kelley’s proposal, and he admitted that introducing the legislation was intended to start a multi-year conversation about budget priorities and spending. Even if the measure were to be passed by the legislature, voters would have to approve a constitutional amendment before the proposal could be put into effect.