Long, long ago, in a financial galaxy far, far away, the State of Alaska might have needed a limit on spending written into the state constitution. In that distant OPEC-like world, oil paid for everything Alaska could reasonably want, with room to waste money on a whole lot more. Even though the Permanent Fund swept a good chunk of oil money off the table, it looked as if Alaska's appetite for oil-funded goodies would know no bounds.
Legislators responded with a constitutional amendment to limit spending. Voters approved the amendment in 1982.
That limit was set so high, it never capped anything. It didn't have to. Not long after the limit passed, the state's oil revenues began to tumble. The shrinking supply of easy money put the clamps on spending. Today, state spending per Alaskan, allowing for inflation, has fallen to levels not seen since the late 1970s, before the big oil money started flowing.
Yet the state Senate, led by Dave Donley of Anchorage, has decided Alaska still needs a new, tighter spending limit carved into the state constitution. Sen. Donley shepherded a proposal through the Senate in May. That version capped increases in state-funded discretionary expenditures at half of population growth and inflation. (Of course, Permanent Fund dividends and inflation proofing didn't count against the cap, nor did all the federal money Ted Stevens sends our way.)
Last month, the House Judiciary Committee tweaked the Senate version to make it less onerous, allowing a flat 2 percent a year increase.
Writing a spending limit into the constitution would hamstring Alaska as we struggle to find a sustainable way of funding important state services. Nonetheless, Sen. Donley says Alaska needs his spending limit. Otherwise, Alaskans won't let legislators pursue any kind of comprehensive plan to fund state services as oil revenues continue to shrink. They need assurance, he says, that any new state money won't be wasted.
That assurance is readily available, as it always has been -- at the voting booth. In these much leaner financial times, there is precious little money for legislators to waste on frivolous things. Just delivering today's hardly extravagant level of state services takes somewhere between half a billion and a billion dollars a year from state savings accounts.
Scarcity, combined with accountability to voters, puts a practical, effective limit on state spending -- right now. Alaska doesn't need a new spending limit chiseled into the state constitution. It needs legislators who will fund a responsible level of state services and find fair ways to pay for them.
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