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Spending Cap Proposed

A proposal to cap state spending increases at 3% each fiscal year would “limit our state government from growing faster than the economy,” Rep. Bruce Westerman, R-Hot Springs, said during a hearing on House Bill 1041 last week.

Westerman told the House Revenue and Taxation Committee that a 3% annual increase in general revenue spending is sufficient as inflation has averaged 2.5% per year for the past decade.

“Do you wish to vote for continued growth of state government or controlling the growth so that it more closely emulates growth in the economy?” he asked.

General revenue spending was growing by more than 5% each fiscal year before the economic slowdown reduced state revenue, Westerman said. The tax committee approved the bill.

Co-sponsors include six Republican state senators and 46 House Republican representatives. Westerman is the Republican leader of the House.

The director of the Department of Finance and Administration can approve spending above the 3% cap to meet emergency needs.

Extra expenses must be requested by the governor and approved by a joint House-Senate budget committee or the Legislative Council, which consists of 20 representatives and 16 senators.

Gov. Mike Beebe said the proposed cap was unnecessary as Arkansas has a conservative budget process.

Beebe has proposed general fund spending of $4.9 billion in fiscal 2014 and $5.1 billion in fiscal 2015.

Arkansas ended fiscal 2012 with a record surplus of $145.6 million from general fund revenues totaling $4.8 billion.

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