Legislature Abdicates It’s Budget Responsibility

State government spending is out of whack.  Major spending decisions are bypassing the legislature and are being made by Governor Asa Hutchinson with the approval of just one legislative committee.

Rainy-Day Fund

Governor Hutchinson wants to give $21.9 million from a state rainy-day fund to Arkansas Department of Transportation to use as matching funds to obtain federal highway money.[i] Forget for the moment whether you are for or against spending more state money on highways.  The question is whether so much spending discretion should be in the hands of the Governor instead of the legislature deciding by law what specific items should be funded through an appropriation bill.

How much is this really?

Let’s put the expenditure in perspective by comparing the $21.9 million in discretionary funds the Governor wants to spend to some other allocations made earlier this year by law under the Revenue Stabilization Act.

  • Municipal Aid Fund $ 29,372,099
  • $21.9 million (rainy-day item)
  • County Aid Fund $ 21,428,616
  • Parks and Tourism Fund Account $20,425,108
  • County Jail Reimbursement Fund $ 18,263,607
  • Arkansas Agriculture Department Fund Account $17,298,621
  • Child Support Enforcement Fund $ 12,984,053
  • Crime Information System Fund $ 3,759,593[ii]

Constitution’s Appropriation process vs. rainy-day spending

The Governor has asked the committee, Legislative Council, to approve transferring $21.9 million from a rainy-day fund to the Department of Transportation. Approval by a mere committee is a far cry from how normal budget decisions must be made. As envisioned by the Constitution, how much to spend and for what must be passed by an appropriation law approved by a 3/4ths majority vote of the House of Representatives and a 3/4ths majority vote of the Senate. And even after the appropriation law is passed the Revenue Stabilization Law is then revised to determine how much of each appropriation will be distributed to each fund.

How is the Governor able to by-pass this legislative process?  The legislature has abdicated its constitutional authority by transferring huge amounts of money into a rainy-day fund and then authorizing the governor to pick and choose what he wants to spend it on and how much, as long as just a committee approves it.

In no way can you equate one legislative committee’s rubber stamp of the Governor’s decision with the approval requirement for appropriation bills under the constitution.

Why bypass the Constitution in this instance?

Was this an unforeseen emergency?  No! The Highway Commission has been whining for years about wanting more money.  Then in 2017 Governor Hutchinson pushed for more money for highways by supporting a bond issue and a new tax on gasoline and diesel.[iii] When the legislature rejected the plan, the Governor announced his support of an effort to gather voter signatures to put on the ballot the question of passing the bonds and taxes by an act initiated by the people.[iv] That effort died, but we expect the Governor to try again to pass a bond issue with the taxes supporting it.

The legislature meets every year and just met a few months ago. The new annual budget was passed in March of this year and only went into effect on July 1, just a month ago. The legislature meets again in less than six months. There is no good reason for the legislature to allow such expenditure outside the appropriation process.

The real reason?

One of the statistics that the press keeps up with is how much of a spending increase there is in the state’s General Revenue Fund. So, we are seeing more and more money transferred to other funds and then spent with little notice from the press.  Looking only at the General Revenue Fund makes the spending increase look lower, as reported by the press. With the press being so easily distracted by the General Revenue Fund numbers, it is no wonder politicians want more and more spending done outside of the Fund so their spending doesn’t sound as bad. Even if it means abdicating responsibility over spending from discretionary or rainy-day funds.

Send the legislature home

If you were to sit through one of the legislature’s budget hearings, you would see that the budget process is not so much about determining how much money an agency needs to do its job but is more about having an opportunity to grill agency directors about complaints from their donors and constituents, and then deciding how much of an across-the-board increase all agencies should get based on the Governor’s recommendations.

If the legislature is going to keep abdicating its responsibility by transferring huge amounts of money to a discretionary fund for the Governor, why do we even need the legislature.  If this strategy can pass constitutional scrutiny, then what prevents all funds from being automatically transferred to a rainy-day fund and therefore bypassing the legislature for all budget decisions? They could just stay home and let the Governor decide everything. But if they stayed home, they would miss out on some swell meals and booze provided by lobbyists.

In 2015, the legislature claimed it needed a huge salary increase because it is a full-time legislature. They got a salary increase of 148%.[v]  They have gotten even higher salaries since 2015. With the legislature allowing more and more discretionary spending by the Governor, legislators should refund the salary increases to taxpayers.

[i] http://www.arkansasonline.com/news/2018/jul/28/hutchinson-offering-22m-to-get-road-aid/

[ii] http://www.arkleg.state.ar.us/assembly/2017/2018F/Acts/ACT259.pdf

[iii] http://www.arkleg.state.ar.us/assembly/2017/2017R/Pages/BillInformation.aspx?measureno=HB1727

[iv] http://www.arkansasonline.com/news/2017/mar/11/governor-favors-road-bond-plan-20170311/

[v] http://www.arkansasonline.com/news/2015/feb/02/panel-oks-initial-review-calling-salary-increases/