This morning Senate and Assembly Republicans held a news conference at the State Capitol to announce a formal proposal to institute state government spending limits. 

An overview of the elements of their proposal:

Establishes A Spending Limit
Enacts a strict spending limit that restricts spending growth each year to the combined percentage change in the state’s population growth and inflation, currently averaging about 5 percent. 

Establishes a prudent Reserve Fund

• Creates a Special Reserve Account that may only be spent when revenue falls below the spending limits for a given year, subject to a two-thirds vote. 
• The maximum amount that can be accumulated in the new Special Reserve Account may not exceed ten percent of the expenditures allowed under the spending limit.  Any leftover funds, including interest, will carry over from one year to the next. 

Responsibly Allocates Excess Revenues

• Any tax revenue in excess of the spending limit they will be allocated in the following ways:
• 50 percent will go to the new Special Reserve Account (up to the maximum amount).
• 50 percent will go to make interest payments on state debt, repaying any outstanding debt from the Deficit Recovery Bonds (Prop. 57) or repaying any outstanding loans from the Transportation Investment Fund (Includes an education maintenance factor).
• Once the reserve reaches the maximum amount or the debt is repaid, any remaining dollars will fund temporary reductions in the state sales tax.

Provides Mandate Relief for Local Governments and Schools

State mandates imposed by the Legislature on local governments and school districts will either be fully funded in the budget or suspended for the fiscal year.

Encourages Multi-Year Fiscal Planning
Gives lawmakers more information on how the budget choices made today will impact future state budgets, and allows them more time to develop reforms and program changes without negatively impacting important programs.

Protects Taxpayers
Stops politicians from trying to push through tax increases disguised as fees by redefining so-called “Sinclair Paint” fees as taxes, making them subject to a two-thirds vote of the Legislature. 

Prevents the Legislature from Adjourning Until Budget is Enacted

Assembly Republican Leader Villines said at the conference announcing the proposal:

Senate Republican Leader Dave Cogdill and Villines have a column on this proposal in today’s Sacramento Bee.

Of course the reality of the political situation in Sacramento is that the liberal Democrats who control the legislature have no intention of ever adopting any kind of spending limits, because as long as there is still a taxpayer moving around out there, then they will try to stick him or her with more taxes…

But this proposal is important because it shows the contrast between how Democrats and Republicans would govern, and demonstrates that while Republicans may lack the votes in the legislature (thank in large part to a terrible redistricting plan), they do not lack in sound policy initiatives, and common sense ideas to prevent the kind of massive and irresponsible overspending that takes place currently in state government.

Look for more on the GOP spending limit proposal in an exclusive column in tomorrow’s FlashReport…  We’ll also bring you video footage from today’s media event.

This entry was posted on Wednesday, June 18th, 2008 at 12:00 am and is filed under Blog Posts.