This post is a little technical and is based on questions raised in the comments of my previous post. So, to recap, the Indiana ballot this year will feature a “balanced budget” question which, I assume, will pass because “hey, balanced budget, sounds great!” is about as deeply as the average voter will think about this. We already have a “no debt” requirement in the Indiana Constitution. But, there seems to be a legitimate question as to whether this will disrupt the way Indiana currently runs its budget, even though the current budgetary procedure has steered us clear of debts for a long time now.
The current Article 10, section 5 of the Indiana Constitution says, “No law shall authorize any debt to be contracted, on behalf of the State, except in the following cases: to meet casual deficits in the revenue; to pay the interest on the State Debt; to repel invasion, suppress insurrection, or, if hostilities be threatened, provide for the public defense.” The proposed amendment (pdf) would add language, in part that reads: “The total amount of expense appropriations enacted by the General Assembly for a biennial budget may not exceed the estimated revenue of the State in the biennial budget period.”
The current practice is to account for cash on hand (which is not revenue) and the near certainty that 100% of money appropriated won’t be spent. The budget balances at the end even though estimated revenue is less than appropriations. But, here (as I read it) it says that at the time of enactment, anticipated revenues have to meet or exceed appropriations at the time money is appropriated. So, saving money doesn’t do you any good, and you have to pretend that every dime you appropriate will be spent which is not the case — I think usually there seems to be something on the order of 3-5% of appropriations that aren’t spent and revert to the general fund.
As written, it appears at least arguable that when adopting a budget, the General Assembly can’t account for money saved from prior years or money it can reasonably anticipate not being spent from appropriations.
FWIW: 1. Ballotopedia says this proposed amendment requires 20 years of education to understand it.
2. It was passed in the Gen. Ass. by a large margin and was supported by both parties. This would seem to mean they don’t understand it, either.
My view? This is too complex to approve without public discussion and should be rejected this time.
It can be analyzed if the Indiana Legislative leaders explained how it would change how they put together the budget.
If there is no change, why is it needed?
If it will change the process, how so?
To my knowledge no one has asked our Legislators this question.
The current language in the Constitution is legally useless. Quad is issue capital debt and Hovey v Foster interpreted as to allow operating debt under the definition of casual deficits in revenue. The language allows for revenue from all funds, so I believe the DeBoer argument fails as well.
The easy fix is that the ‘estimated revenue’ number goes up to meet the planned budget. What actually happens won’t matter for the current budget process. Then we will continually underperform on our revenue projections. Those projections are already fairly meaningless and will become even more so under this scenario.
The property tax caps were also too complicated for the general public, but a catchy name/theme got them enshrined in the constitution.
It’s not about good governance – it’s about good feelings.