The Alaska Senate today passed a bill to limit the growth of state spending.
SB 196, sponsored by the Senate Finance Committee, caps unrestricted general fund (UGF) spending at $4.1 billion.
“Alaska must control its spending in order to refill our savings accounts and sustain constitutionally required programs Alaskans rely on in their everyday lives,” said Senate Majority Leader Peter Micciche (R-Soldotna). “Senate Bill 196 will help constrain the growth of government, so in the future we don’t find ourselves in the same difficult fiscal situation we face today.”
The spending limit is a key priority for the Senate Majority. The Senate passed a spending limit in 2017 paired with a bill that placed guard rails around draws from the Permanent Fund earnings reserve, but the spending limit provision was rejected by the House Majority. This year, the Senate passed the spending limit as a standalone bill to simplify negotiations with the House on a solution to the state’s budget deficit.
“Had we had an effective spending cap in place during the fiscal years of 2006 through 2014, we would have about $15 billion in our Constitutional Budget Reserve right now,” said Sen. Natasha von Imhof (R-Anchorage). “A spending cap could give the Legislature the discipline it needs to keep state spending at a reasonable level from one year to the next.”
To promote transparency with the public, the bill requires the governor to submit a report, along with the budget, comparing the governor’s spending proposal with the spending limit. In addition, the spending limit adjusts over time to reflect changes in inflation.
“SB 196 plants a seed for a future tree of fiscal sustainability for Alaskans,” said Sen. Micciche. “Had the Legislature passed this bill 15 years ago, we would have billions more in savings, new taxes would not be a primary objective for the current House Majority, and it’s unlikely the governor would have cut Permanent Fund dividends.”
The limit does not apply to appropriations to the Alaska Permanent Fund, payments for Permanent Fund dividends, required spending for state debt obligations, capital projects, or to meet a state of disaster declared by the governor as prescribed by law. The bill also has a three year “look back” provision to evaluate how the limit is working.
SB 196 passed the Senate by a vote of 13 to zero after Senate Democrats opposed the bill during the floor debate and chose to not participate in the vote. The bill is now on its way to the Alaska House of Representatives for consideration.
