SJR 7 Balanced Budget Amendment

 

Bill Status

SJR 7 passed both the Indiana House and Senate and will appear on the ballot in November 2018.  It must be adopted by a majority of voters in order to amend the Indiana Constitution.


Bill History


 

 

Executive Summary

 
SJR 7 would amend Indiana's Constitution to assure that the total amount of expense appropriations enacted by the Indiana General Assembly for a biennial budget may not exceed the estimated revenue of the State in the biennial budget period.  It would also provide that if expenses exceed actual revenue when reconciled at the close of a biennial budget period, the subsequent biennial budget must subtract any shortfall from the projected revenue available for that subsequent biennial budget.  SJR 7 allows these requirements to be suspended if at least two-thirds of the members of the Indiana House of Representatives and at least two-thirds of the members of the Indiana Senate vote to suspend the requirements.
 
 

Analysis

 
The Indiana Constitution gives the following guidance regarding debts on behalf of the State of Indiana:
 
Article 10  Section 5

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.
 
 
Thankfully, through much of our recent history the Indiana General Assembly has not accrued massive debts.  However, the exception within our State Constitution allowing debts to “meet casual deficits” has been interpreted by the courts to mean that virtually any debt the Indiana General Assembly views as a “casual deficit” will be viewed by the judiciary as a “casual deficit” and therefore not at odds with the Indiana Constitution. 
 
This interpretation allows the Indiana General Assembly to skirt the spirit of the Indiana Constitution and run up large deficits if it so chooses.
 
SJR 7 is a constitutional amendment that would correct this loophole.  It would tighten up our constitutional protection against continual deficit spending.  The lone exception would be for some unforeseen emergency and even in that circumstance the Indiana House and Senate would have to vote by a two thirds super-majority to temporarily violate the Balanced Budget Amendment.   
 
 

Conclusion

 
Hoosier families are forced to live within their means.  When expenses start to run higher than income, citizens must make tough choices and cut spending.  We expect no less of our government.  Creating an environment where the long-term expectation will be that Hoosier citizens are not expected to shoulder the load of massive State debt is a positive development.  Creating this environment will give Hoosier families peace of mind and allow them to plan their financial future with this assurance in mind.
 
IFI supports SJR 7.