State Senate fails to pass spending cap

Measure was seen by some as being critical to gain support for taxes or use of permafund

Posted: Thursday, April 08, 2004

An effort to put a state spending cap in the Alaska constitution failed in the Senate on Wednesday.

The measure - which some have said is critical to gaining public support for taxes or use of Alaska Permanent Fund spending - fell two votes short of the 14 needed to put a constitutional amendment before voters.

Democrats, who opposed the measure, argued it could prevent adequate spending on schools, would be difficult for voters to understand and would not be part of an overall plan to address the state's long-term fiscal problems.

"I am just not convinced that it's a good thing for this state to bind future Legislatures' ability to spend the money that might be needed for education," said Sen. Gretchen Guess, D-Anchorage. "It's not how to grow the state. It's not how to move it forward."

Sen. Fred Dyson, R-Eagle River, sponsored the proposal. He argued it is flexible enough to adequately provide for schools.

He said it would force lawmakers to set priorities and would prevent them from wasting a windfall that might come to the state if a natural gas pipeline is built.

"It will cause us to do some picking and choosing," Dyson said. "There are many things the state does that are far less important than education."

He said those who would like to see new revenues, such as taxes or use of permanent fund earnings, to fill the state's fiscal gap should support the measure because it will raise public confidence that new revenues would be spent responsibly.

The proposed spending cap is a complicated formula that generally limits growth in state spending to no more than the rate of inflation and population growth. If personal income grows more slowly than inflation, the cap would rise according to income growth, not inflation.

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