Balanced budget amendment won't fix state finances

What others say

Posted: Wednesday, January 12, 2005

Anchorage State Reps. Norm Rokeberg (R) and Ethan Berkowitz (D) are right about a couple of things.

They know that despite record-high oil prices, Alaska's long-term finances are still shaky. Lawmakers need to consider alternatives to fiscal business as usual. For years, they have gambled on high oil prices and covered shortfalls with the state's now-shrunken reserve funds.

The two also know that Republicans and Democrats need more cooperation across party lines, as they are doing.

Too bad, then, that their commendable fiscal responsibility and bipartisanship have led them to propose a distraction of a fiscal ''solution.'' They want to add a balanced budget amendment to the Alaska Constitution.

A balanced budget amendment is so impractical it is symbolic at best. It is devilishly difficult to write one that would actually work. There are too many ways for lawmakers to play accounting games with different spending accounts and revenue sources.

The easiest trick, which Alaska governors and legislators have used throughout the years, is to write a budget based on unrealistically high oil prices. Another gimmick is to shift spending items from the basic budget, known as the general fund, to special accounts with separate funding sources. The Rokeberg-Berkowitz proposal would run afoul of both creative accounting strategies. It only limits ''general fund'' spending to ''anticipated'' revenues.

Rep. Berkowitz says he's not wedded to the current terminology. But, given legislators' aptitude for juggling the books, he'll have a hard time finding words to do the job. Anticipating and closing all the potential loopholes could take a measure the size of the U.S. tax code. When legislators tried last spring to craft a reasonable spending limit, they produced a complex mishmash too weak for anti-spending hawks and too complicated for constitutional purists.

However, they might wish to tie their own hands in the constitution, lawmakers face only one budget-writing constraint that really matters. They can't spend money so fast that the state runs out of cash to pay the bills. But even so, the state can take out short-term loans to cover cash-flow problems.

Reps. Rokeberg and Berkowitz realize that, when balancing a budget, there are two sides to the equation: spending and revenue. They realize you can't just clamp down on the spending side, as the Legislature tried but failed to do last session. They realize you can't just clamp down on the revenue side, as Anchorage did two decades ago with its tax cap. They realize that responsible budgeting requires balancing of potential revenues against potential expenses.

But that can't be done by locking a cookbook formula or unenforceable mandate into the state constitution. It requires elected officials to exercise judgment — and isn't that why we elect them in the first place?

— The Anchorage Daily News, Jan. 5

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