Relating to the constitutional limit on the rate of growth of appropriations.
The proposed changes have significant implications for state laws governing fiscal policy and budgetary measures. By establishing a tighter link between economic performance and state spending, advocates suggest that it will promote fiscal responsibility and long-term sustainability. This is intended to prevent periods of fiscal stress, which can arise from unchecked spending growth that outpaces revenue. However, the bill will only apply to appropriations made beginning in the fiscal biennium starting September 1, 2019, ensuring that previously enacted budgets remain unaffected.
House Bill 127 aims to amend the constitutional limit on the rate of growth of appropriations from state tax revenues not dedicated by the constitution. The bill stipulates that the rate of growth of appropriations in a state fiscal biennium may not exceed the estimated rate of growth of the state's economy. This provision is intended to create a more disciplined budgeting process by aligning state spending with economic growth, thereby preventing excessive increases in the state budget compared to revenue sources.
Debate surrounding HB 127 has highlighted concerns over its potential effects on the flexibility of state budgeting. Proponents argue that tying appropriations to economic growth is a safeguard against financial mismanagement. Conversely, critics have raised issues about the potential drawbacks of restricting legislative budgetary discretion during economic downturns when increased spending may be necessary to support public services. The tension lies in balancing fiscal prudence with the need for responsive government funding.
Moreover, the bill mandates that the Legislative Budget Board will determine the estimated rate of economic growth and ensure compliance with the new appropriations framework. This introduces a statutory mechanism intended to provide regular assessments of state economic conditions, impacting future financial planning and resource allocation within the legislature.