The proposed balanced budget amendment is not only unnecessary, it is poor policy

I have had some people asking me what my position was on the proposed constitutional amendment that is on the ballot this election. First, I will preface my response with I can think of very few instances where I would ever think a constitutional amendment would be necessary and appropriate. This is not one of those instances.

Public Question #1 asks:

“Shall Article 10, Section 5 of the Constitution of the State of Indiana be amended to require the General Assembly to adopt balanced budgets for state government that do not exceed estimated revenues unless a super-majority of two-thirds of the members of the House of Representatives and two-thirds of the members of the Senate vote to suspend the requirement?”

I think the proposed amendment is not only unnecessary, it is poor policy.  

The Amendment is Unnecessary

  1. The amendment is superfluous to current laws

Indiana already has a similar provision in its constitution. In 1851 a provision was enacted to protect Indiana from a financial. Currently,the Indiana is required to pass a balanced budget in that  the Constitution currently requires “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.” In addition, Indiana statutes create a state spending cap, forbid the carrying over of a deficit from one year to the next, and restrict debt used to meet casual deficits in the revenue.

In other words, our current laws already place strict limitations on the purposes for which the state can borrow money, the length of the loans, and the terms of repayment. Therefore, if the intent of the amendment is simply to require a balanced budget, it is superfluous to our existing law.

  1. The amendment could weaken the current protections

The wording of the proposed amendment allows a super-majority (which Indiana Republicans currently hold in both the house and senate) to opt out of the balanced budget requirement. Therefore, the amendment could effectively weaken the current constitutional and statutory protections discussed previously because the two-thirds override actually leaves the door open to spend in a way that the Indiana Constitution currently doesn’t allow.

  1.   There is no evidence a debt spiral is on the horizon

The General Assembly has been approving balanced budgets for 167 years. The question of whether or not to balance the budget has never been an issue. It’s always been balanced. A constitutional amendment is a big deal. This begs the question of why are we doing this if there is no real issue to address? It is essentially a solution in search of a problem.

The Amendment is Poor Policy

  1. A balanced budget does not necessarily equate to fiscal responsibility

Most people instinctively think that a balanced budget is good policy. We have to live within our means, why shouldn’t the government right? That is not necessarily the case, especially when it comes to governments. Strict budget requirements impede the ability of governments to make necessary public investments. First, people responsibly borrow money all the time. For example, I am still paying on my student loans after 20 years. However, those loans were the only way I could go to law school and I have never missed a payment. Going to law school allowed me to earn more money than not going to law school and I am able to repay the loan. So, I believe that debt was a fiscally responsible decision.  

Another example of responsible borrowing would be if I had a hole in my roof, I would have to use my savings or take out a loan to repair it. I wouldn’t just let the hole remain open allowing water to come in and cause more damage to my home. That is what Indiana has essentially been doing. We are hoarding a surplus of millions of dollars while our teachers haven’t had a pay increase in nearly two decades, while DCS is failing, and while our roads and bridges are crumbling around us. We have been playing kick the can while Indiana sits on an untouched surplus, which is just allowing the problems to grow and become more difficult and more expensive to fix in the future.

  1. It would be difficult to enforce

Since the budget works with projections, not actual revenue, it would be easy for policymakers to manipulate state finances to “balance” the budget. As a result, we could find that we have increasing debt despite the claims of a balanced budget.

Those are just my thoughts. I will be voting no.

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