Beebe administration will fight bill to cap spending growth


LITTLE ROCK — The Beebe administration is gearing up to oppose a Republican House member’s proposal to impose a cap on growth in state spending.

House Bill 1041, filed Thursday by Rep. Bruce Westerman, R-Hot Springs, would prohibit expenditures from the state’s general treasury from exceeding 3 percent more than the previous fiscal year’s spending or the average gross domestic product for the preceding three fiscal years, whichever is smaller.

In memos obtained obtained by the Arkansas News Bureau on Friday, the state Department of Finance and Administration had already compiled a list of talking points to argue against the measure.

Westerman said Friday he had expected to face opposition.

“I think it says that they’re not wanting to help control spending, that they’re trying to be business as usual,” he said.

Beebe spokesman Matt DeCample said Friday the governor had seen D&FA’s analysis and also had concerns about the bill.

“We’re still trying to find the reason to have such a law because the Legislature already has the power to control spending as much as they want,” DeCample said.

At the top of the list of DF&A’s concerns is a question about the bill’s constitutionality. The administration says the state constitution gives the Legislature the responsibility to make laws, appropriate money and set state funding levels, but HB 1041 would give the DF&A director the responsibility of determining state expenditure levels.

Officials also say the measure could result in cuts to essential services.

In 2003, the Legislature passed a so-called “doomsday” provision mandating that if sufficient funding is not available to maintain what the Legislature has determined is adequate funding for public schools, the balance will be taken proportionately from other programs. DF&A officials say a 3 percent increase over the previous year’s spending likely would meet adequacy, but if the average gross domestic product for the three previous years is smaller, that would become the cap and the amount could fall short of adequacy.

As a result, essential services such as those provided by the Arkansas State Police, the Department of Correction and Medicaid could be cut, according to the memos.

Officials also contend the proposal would cause instability surrounding general revenue bonds for major economic projects and is unclear on how spending and the gross domestic product would be calculated.

Westerman said Friday there is no constitutional problem with his bill.

“All it delegates to DF&A is that they report the GDP numbers,” he said, noting that similar language is used in the state’s revenue stabilization law.

Westerman also said that if a situation arose in which essential services were jeopardized, lawmakers could simply raise the cap.

‘That’s why I wanted to do it with legislation instead of constitutionally like some states are looking at doing,” he said.

Westerman can also expect opposition from at least some Democrats in the House. House Minority Leader Greg Leding, D-Fayetteville, called the proposal “pretty dangerous.”

“You’re kind of painting yourself into a corner or handcuffing the Legislature,” he said.

Westerman said he did not know when he would present the bill in committee, but he said he wanted to “get it out there.”

“I knew that criticisms would come and we would need to vet it,” he said. “I’m not naive enough to think that we might not need to amend it some. We’ll go through the process and see what happens.”