You are the owner of this article.
News-Miner Editorial

Caution on spending limit: Putting restriction in Alaska Constitution amid fiscal uncertainty is risky

News-Miner opinion: It’s best to keep all your options available in times of financial stress. For example, a person might need to get a second job in order to pay the rising cost of some regular bills or to have enough money to pay for the addition of a child to the family.

Sometimes you don’t have the option of spending less.

It might not be possible in such situations to say, “We’ll just have to eat less and go to the doctor less often so we can pay these increased bills and buy clothes for the kids.”

Similar logic can apply to our state and its financial situation.

It would be unwise for Alaskans to say, “Nope, we’re never going to allow our state to spend more than X amount even though we don’t know yet what expanded or additional services we might need in the future.”

And yet that’s what the effect of putting a spending limit in the Alaska Constitution would do. Gov. Mike Dunleavy wants the Legislature to put a constitutional amendment on the 2020 ballot as part of his plan to prevent budget deficits.

(Alaska does have a spending limit in its Constitution, put in place in 1982, but it has never been triggered because the dollar base was set too high.)

The governor’s proposal is pretty straightforward. Here’s the key passage of his proposed amendment:

“Appropriations made for a fiscal year shall not exceed the average of the appropriations made in the previous three fiscal years by more than 50% of the cumulative change in population and inflation since Jan. 1 of the previous calendar year, derived from federal indices as prescribed by law, or 2%, whichever is less.”

The bottom line is that spending would not be allowed to increase more than 2% a year, with a few exceptions, period.

Preventing deficits is something everyone should be able to agree on. But relying solely on a hard limit on spending and rejecting, as the governor has done, the idea of taxes can create problems.

For example, what if the state sees a sharp upturn in revenue due to a sudden boom in oil industry activity and Alaskans want some of that money spent on new or expanded services? Putting a spending limit such as the governor’s in the Constitution rather than simply as a state law with an override provision doesn’t allow the Legislature to meet the public’s wishes.

Some override mechanism is fairly common among states that have either a spending or tax limit.

Also of note given the governor’s decision to essentially push off some costs to local governments — reducing K-12 education funding, for example — is that many states that have spending or tax limits also prohibit the state from imposing unfunded mandates on local governments or transferring state functions to local governments.

Alaska has no such prohibition. So a constitutional spending limit could lead the state to shift more services to local governments, who would then have to turn to local taxpayers for revenue if the service is to continue.

Also, growth in mandated and formula-driven programs will naturally force reductions in programs that aren’t mandated, like the Alaska Marine Highway System, for example.

Studies show that, as a whole and depending on their type, tax and expenditure limits have a mixed record of success. In some instances they can actually lead to increased spending, though that is unlikely with the type of limit proposed by Gov. Dunleavy.

What Alaskans should be wary of is a belt that is so tight that it is difficult to feed the body.

The governor’s proposal might be palatable, however, if it could contain a legislative override provision or if the limit were in place for a short period of time, perhaps four or six years, and then required to be put to another vote to see if Alaskans wish to continue with it.

Absent that, Alaska has three spending limits available already: the House, the Senate and the governor.

We don’t need a fourth.

The Daily News-Miner encourages residents to make themselves heard through the Opinion pages. Readers' letters and columns also appear online at newsminer.com. Contact the editor with questions at letters@newsminer.com or call 459-7574.

If you're interested in submitting a Letter to the Editor, click here.

Guidelines

The Daily News-Miner encourages residents to make themselves heard through the Opinion pages. Readers' letters and columns also appear online at newsminer.com. Contact the editor with questions at letters@newsminer.com or call 459-7574.

Community Perspective

Send Community Perspective submissions by mail (P.O. Box 70710, Fairbanks AK 99707) or via email (letters@newsminer.com). Submissions must be 500 to 750 words. Columns are welcome on a wide range of issues and should be well-written and well-researched with attribution of sources. Include a full name, email address, daytime telephone number and headshot photograph suitable for publication (email jpg or tiff files at 150 dpi.) You may also schedule a photo to be taken at the News-Miner office. The News-Miner reserves the right to edit submissions or to reject those of poor quality or taste without consulting the writer.

Letters to the editor

Send letters to the editor by mail (P.O. Box 70710, Fairbanks AK 99707), by fax (907-452-7917) or via email (letters@newsminer.com). Writers are limited to one letter every two weeks (14 days.) All letters must contain no more than 350 words and include a full name (no abbreviation), daytime and evening phone numbers and physical address. (If no phone, then provide a mailing address or email address.) The Daily News-Miner reserves the right to edit or reject letters without consulting the writer.

Submit your news & photos

Let us know what you're seeing and hearing around the community.