Yesterday the Senate Ways & Means Committee heard SB 6660. The bill would repeal the state expenditure limit and strengthen the four-year balanced budget requirement.

Currently, the Legislature must adopt a budget that balances over four years. The funds subject to this requirement are the general fund–state (GFS), the education legacy trust account, and the opportunity pathways account. SB 6660 would add the workforce education investment account, the dedicated marijuana account, and the liquor revolving fund to the requirement. (Additional funds could be added to the requirement in the future. Under the bill, every two years the Economic and Revenue Forecast Council would review each state account from which at least $50 million was appropriated and make recommendations to the Legislature as to whether they should be included.)

Additionally, under current law, the four-year balanced budget requirement does not apply in a biennium in which money is appropriated from the rainy day fund. SB 6660 would limit that exception so that the requirement does not apply only if rainy day fund appropriations are made when employment growth is less than 1 percent.

SB 6660 would also require the governor to propose operating budgets that balance over four years. (Currently, the governor must propose budgets that balance over one biennium.)

The state expenditure limit was put in place by I-601 in 1993. It hasn’t really been a factor in recent years. During the committee hearing, staff said that the limit only applied once in the last decade, in 2014. The Great Recession and its aftermath had reduced state spending significantly below the limit. And in 2015, the Legislature suspended the limit until fiscal year 2022 (the beginning of the 2021–23 biennium) as it addressed the McCleary decision on school funding. If SB 6660 passes, the expenditure limit would be repealed entirely.

The Senate Ways & Means Committee has scheduled SB 6660 for executive session tomorrow. As we’ve written, it would be good fiscal policy to bring more state accounts into the four-year balanced budget requirement.

(Two other bills have also been introduced to that end, as I wrote last week.)