House panel OKs spending cap

Donley says Legislature must build public confidence

Posted: Thursday, February 07, 2002

Even while other legislators were voting for new taxes Wednesday, the House Judiciary Committee approved a proposed constitutional amendment to tighten the screws on state spending.

And the full House approved a bill requiring state agencies to list spending priorities, an attempt to force those with budgeting expertise in the administration to identify areas for potential cuts.

Key Republican senators have been pushing measures on spending restraint, for both substantive and symbolic reasons.

Senate President Rick Halford of Chugiak and Finance Co-Chairman Dave Donley of Anchorage have said repeatedly that the public first must have confidence that revenue from new taxes won't be wasted.

Last year, on a party-line vote, the Senate passed Donley's amendment for a new spending cap. Since then he has sought to make a cap the first plank of a long-range fiscal plan.

Although many Democrats and Republicans in the House believe new revenue must be raised soon - with several of them voting for income, sales, alcohol and corporate taxes in a different committee - the spending cap now seems a likely part of any package.

Citing public distrust of government, House Majority Leader Jeannette James of North Pole said: "They believe if we start charging them, there's no end."

"This is sort of a negative approach to that," countered Brad Pierce of the governor's Office of Management and Budget, which opposes the spending cap. "Do you need to be saved from yourself?"

"Collectively, we need to be saved from each other," James said.

The version of Donley's amendment approved Wednesday sets spending at $3.328 billion in fiscal year 2004, which begins July 1, 2003. That is an approximate 4 percent increase from the current fiscal year, Donley said. The 2005 limit would be $3.394 billion, a 2 percent increase from the previous year.

Thereafter, increases would be limited to 2 percent per year, based on the spending from two fiscal years prior - that is, a 4 percent increase overall. With a two-thirds vote, the Legislature could approve an increase from two years prior of 6 percent, and with three-fourths, 8 percent. But that extra spending would not carry forward in the base amount on which future increases are calculated.

Excluded are appropriations from federal funds, responses to disasters, payment of permanent fund dividends or appropriations to the permanent fund, debt repayment and a few other categories that make up more than half of the overall spending approved by the Legislature each year.

Donley's amendment, which would be placed on the ballot periodically for reaffirmation or rejection, would replace one approved by voters in 1982. The existing constitutional provision would allow more than $6 billion of spending in the comparable categories, making that limit irrelevant, he said.

But among several objections, Pierce of OMB challenged Donley's inclusion of funds that are self-supported, using no state tax dollars.

"The logic of this legislation doesn't make sense in terms of the categories included under the limit," he said.

By a 3-2 vote, the Judiciary Committee defeated an amendment that would have excluded completely self-sufficient funds, such as occupational licensing.

Chairman Norm Rokeberg, who fears university tuition increases or higher state matches for Medicaid funds could force budget cuts elsewhere, said he would continue to work with Donley on the concept as the legislation moves to the House Finance Committee.

Also on Wednesday, the House approved a bill by Rep. Fred Dyson, an Eagle River Republican, requiring budget rankings by departments from most important to least important expenditures. The vote was 29-4, with "no" votes from Juneau Reps. Beth Kerttula, a Democrat, and Bill Hudson, a Republican.

Critics of the budget-tightening moves say the majority is trying to abdicate the Legislature's annual obligation to make budget choices.

Bill McAllister can be reached at

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