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Under current law, the rate of growth of appropriations in a state fiscal biennium from state tax revenues not dedicated by the constitution may not exceed the estimated rate of growth of the state's economy. The purpose of this limitation is to prevent state spending from getting out of hand.
SB 9 would change the formula used to determine the allowable rate of growth of general revenue appropriations in a state fiscal biennium. Under this bill such appropriations would not be able to exceed the estimated rate of population growth plus inflation. This allows the budget to adjust proportionally with population growth and inflation but not to accelerate beyond that. Additionally, an appropriation to pay for a rebate of state taxes must be excluded from computations used to determine whether appropriations exceed the amount allowable based on population growth and inflation.
SB 9 upholds our principle of limited government by changing the calculation of estimated rate of growth of the state's economy using metrics that are more accurate and will likely lead to a reduction in the growth of appropriations. Instead of using personal income which can be volatile, the LBB would now use the rate of growth of the state's population adjusted by the average annual monetary inflation rate of the same period. This is a responsible and reasonable metric to base the calculations for the limits on the rate of growth of appropriations.
However, the provision that permits an appropriation to pay for a rebate of state taxes to be excluded from computations we believe should be removed. Whenever money is taken it and subsequently returned, it should be accounted for as both income and an expense. To allow these rebates to be counted as income, but not as an expense in these calculations is misleading and problematic.
As a whole, we still support SB 9.
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