This afternoon the House Capital Budget Committee took action and passed legislation that would direct the Secretary of State to submit a constitutional amendment – that would reduce the state’s debt limit from 9% to 7% by FY 2022 – to the voters for approval and ratification, or rejection, in the next general election to be held in the state.
This policy proposal has been a point of contention between the Senate and the House, with the Senate in support and the House opposed.
The key points both supporters and opponents have made about the bill were echoed by committee members this afternoon during deliberations. Those in support shared their belief that it is critical to reduce the state’s debt levels. While those in opposition raised concerns about the impact the reduction in the debt limit would have on state capital projects and workers.
The bill that passed the House Committee – with a vote of 6 to 5- was designed to reflect many of these concerns, especially the need to reduce the debt limit, while minimizing the impact to state projects and workers. The House amended version does the following:
- Reduces the debt limit from 9% to 8.5% beginning in FY 2018 and thereafter. The Senate version reduced the limt from 9% to 7% in half-percent increments every two years beginning in FY 2016 and ending in FY 2022. Current law sets the debt limit at 9%.
- Directs the Legislature to establish an advisory debt limit that is one-half of one percent lower than the constitutional debt limit; and allows the advisory debt limit to be adjusted to reflect changes in economic trends and conditions. The Senate version would allow the Governor and the Legislature to adopt a working debt limit and assumes a working limit of one-quarter of one percent lower than the constitutional limit. In recent years the Governor and Legislature have adopted a working debt limit since 2003. From 2003-2009 it was 8.5% and from 2009-2013 it was 8.75%
- Bases the limit on a prior 3-year average of General State Revenues (GSR) until July 1, 2015 and on prior 10-year average of GSR on and after July 1, 2015. The Senate version contains the same language. Current law basis the limit on a prior 3-year avarage of GSR.
- Includes the State Property Tax in GSR beginning in FY 2016, based on a 10-year average from FY 2006 through FY 2015. The Senate version contains the same language. Current law excludes the State Property Tax from GSR.
Senate Joint Resolution now goes to the House Floor for further consideration.