The budgeting gymnastics Gov. Mike Leavitt has had to employ to take advantage of a strong economy and cover the state's needs illustrate why mandated spending limits are a bad idea.
In his recommended budget, released Monday, Leavitt would place $25 million into a new Transportation Investment Fund. Because that fund would be saved for use in future years, the governor technically would stay within the letter of the Appropriations Limitations Act, a measure passed in 1989 to keep state spending from growing faster than population, inflation and average income levels.However, he would be violating the spirit of the act. Whether he spends the money now or places it in a savings account, he is appropriating it, not returning it.
Ironically, lawmakers will consider in 1995 whether to renew the limitations, which are set to expire. Although he has voiced support for renewal, the governor and the state would be better off if lawmakers let the limits die. That would make the budgeting process more straightforward and honest.
By arbitrarily limiting spending, the Legislature has kept several key governmental functions, including education and transportation, from the kind of funding they deserve in recent years. This despite a strong and vibrant economy that is providing more money without a greater burden on taxpayers.
And the act hasn't truly limited spending. Instead, it has fostered creativity among the governor and lawmakers, who must find ways to set aside the extra money for use in future years. Leavitt can hardly be credited with inventing ways to circumvent the act. But rarely have these maneuverings been as obvious as this year. After all the extra money in the governor's budget is put aside, spending technically would come within $1.1 million of the cap. In reality, however, the new transportation fund would allow the state to keep $25 million more than the limit.
As they begin meeting in January, state lawmakers need to ask themselves the purpose of the act. Is it to return all money above a certain limit to the public? If so, the act isn't working. Is it to make government more honest in its budgeting process? Again, the act has the opposite effect.
At the moment, the state needs extra money to keep up with the demands of growth. New construction has strained its ability to provide needed infrastructure. The boom may be leveling, but the needs still remain.
The smart course would be for state government to spend some of the extra money it has now to cover these needs. The money is available, and it could be used without adding extra burdens to taxpayers. But the Appropriations Limitations Act makes that difficult without using techniques that appear deceptive.
The Revenue and Taxation Committee voted recently to recommend extending spending limits for another 10 years. It may not be politically popular to reject that recommendation, but lawmakers should do so. The act has proven useless.