Citations Affected: IC 4-10-20.
Synopsis: State spending limit. Limits increases in state expenditures
to an amount based on the increase in inflation and population. Allows
the general assembly to authorize additional spending through adoption
of a concurrent resolution. Provides that certain state revenues that
exceed the spending limit are to be deposited in the property tax
Effective: Upon passage.
November 20, 2001, read first time and referred to Committee on Finance.
A BILL FOR AN ACT to amend the Indiana Code concerning state
IS ADDED TO THE INDIANA CODE AS
A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE UPON
Chapter 20. State Fiscal Year Spending Limit
Sec. 1. (a) This chapter does not apply to the extent that payments for pensions, including accrued unfunded liability, and final court judgments on which the state is obligated to pay exceed the spending limits imposed by this chapter.
(b) This chapter does not apply to the extent that money expended from a reserve fund exceeds the spending limits imposed by this chapter if the initial transfer of the money into the reserve fund was included in the fiscal year spending of a previous state fiscal year.
Sec. 2. As used in this chapter, "CPI" refers to the United States Bureau of Labor Statistics Consumer Price Index for All Urban Consumers for the U.S. City Average for All Items, or its successor index.
Sec. 3. As used in this chapter, "fiscal year spending" means all state governmental expenditures and reserve increases in a state fiscal year, except expenditures from the following:
(1) Money deposited into the property tax replacement fund under section 10 of this chapter.
(2) Money received as gifts.
(3) Federal funds.
(4) Money collected for another government.
(5) Pension contributions by employees and pension fund earnings.
(6) Money received from damage awards.
(7) Money received from property sales.
(8) Money received from settlement awards.
(9) State dedicated funds.
Sec. 4. As used in this chapter, "inflation" means, with respect to any fiscal year, the lesser of:
(1) the percentage change between:
(A) the quotient of:
(i) the sum of the CPI for the twelve (12) months ending in April of the calendar year before the adoption of the state biennial budget; divided by
(ii) twelve (12); and
(B) the quotient of:
(i) the sum of the CPI for the twelve (12) months ending in April of the calendar year before the calendar year described in clause (A); divided by
(ii) twelve (12); or
(2) six percent (6%).
Sec. 5. As used in this chapter, "maximum annual percentage change in fiscal year spending" means the sum of the following:
(1) Inflation with respect to the fiscal year in question, as calculated under section 4 of this chapter.
(2) The annual percentage rate of change in population.
(3) One percent (1%).
Sec. 6. As used in this chapter, "population" means:
(1) the number of Indiana residents as estimated by the United States Bureau of the Census each year; or
(2) the number of Indiana residents as counted by the United States Bureau of the Census in a decennial census;
whichever is determined later.
Sec. 7. As used in this chapter, "state fiscal year" means the twelve (12) month period beginning July 1 in a calendar year.
Sec. 8. Before July 1 of calendar year 2002 and each even-numbered year thereafter, the department of state revenue shall:
(1) certify to the governor and the legislative council:
(A) the inflation amount calculated under section 4 of this chapter; and
(B) the annual percentage rate of change in population; and
(2) release the information certified under subdivision (1) to the general public.
Sec. 9. (a) This subsection applies to a state fiscal year beginning July 1 of calendar year 2003 and each odd-numbered year thereafter. The state may not increase fiscal year spending more than the maximum annual percentage change in fiscal year spending applicable to that state fiscal year.
(b) This subsection applies to a state fiscal year beginning July 1 of calendar year 2004 and each even-numbered year thereafter. State fiscal year spending may not exceed the amount determined under the following STEPS:
STEP ONE: Determine the amount of state fiscal year spending permitted under subsection (a).
STEP TWO: Multiply the STEP ONE amount by the maximum annual percentage change in fiscal year spending applicable to the previous state fiscal year.
STEP THREE: Add the amount resulting from STEP TWO to the STEP ONE amount.
(c) If the general assembly considers it necessary to spend beyond the spending limit imposed by this chapter, the general assembly may do so by adopting a concurrent resolution approved by a majority of both houses of the general assembly. The resolution must state:
(1) that the general assembly desires to budget and spend more funds than permitted by this chapter; and
(2) the reasons necessitating the excess spending.
Upon passage of such a resolution, a cause of action may not be initiated under section 11 of this chapter if the excess spending results from passage of the resolution and the reasons for the excess spending stated in the resolution.
Sec. 10. If revenue from sources not excluded from fiscal year spending exceeds the spending limit imposed under this chapter for that state fiscal year, the excess must be deposited into the property tax replacement fund.
Sec. 11. This chapter may be enforced in a private individual or class action suit. Successful plaintiffs are allowed costs and reasonable attorney's fees. The state may recover costs and reasonable attorney's fees under this chapter only if a suit against it is ruled frivolous. Revenue collected illegally, kept illegally, or spent illegally for the four (4) state fiscal years preceding the date that the suit is filed shall be deposited in the property tax replacement fund commencing for each state fiscal year on the date the state exceeds the spending limitation imposed for that state fiscal year under this chapter.
SECTION 2. An emergency is declared for this act.