Spending Cap Proposal

SJR 4 / SB 20: The foundation of Alaska's fiscal plan

A functional appropriation limit linking government spending to Alaska's private-sector, productive economy

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About the Cap

Why do we need a limit?

Alaska's current spending limit is nearly double what the state has available to spend. This limit has been ineffective at limiting spending since 1982, when it was enacted. An effective limit improves Alaska's stability, predictability, and restraint when the times are good.

How is the limit calculated?

This cap uses a factor based upon a five-year trailing average of Alaska's private sector economic performance. Specifically, Real GDP less government spending, which measures the value produced within our borders and excludes what we are trying to limit.
Link - https://fred.stlouisfed.org/series/AKNGSP

Why use GDP as the factor?

Gross Domestic Product as a factor to limit spending historically is the most responsive to the state's spending needs. Other factors such as population/inflation may miss out on an important productivity factor that is captured in using an economic indicator such as GDP

how would this save money without immediate cuts?

Historically, if this cap were in place Alaska would have "smoothed out" a maximum of $13 Billion since 2002, and saved at least $5 Billion. By pushing forward the "smoothed out" spending, Alaska can contribute to stable construction employment, avoid spikes in maintenance, save money, and work towards better planning.

Why have a constitutional and statutory cap?

A spending cap needs to be in the constitution to be enforceable for future legislatures. This proposal creates an enforceable 12% statutory limit that is capped at 15% in the constitution. Our proposal allows capital spending between the statutory and constitutional limit, with a vote of 2/3 of the legislature, which would help Alaska retain skilled workers through more predictable capital projects .

Spending Subject to Limit

  • = Subject to the Limit
  • = Not Limited by this proposal
  • --------------------------------------------
  • All UGF Operating Expenditures
  • All UGF Capital Expenditures
  • Some Designated General Fund Items
  • Most Statewide Items
  • --------------------------------------------
  • Permanent Fund Dividends
  • Appropriations to Permanent Fund / PCE Endowment
  • Appropriations to a state savings account (e.g. CBR)
  • Direct Spending on a Disaster Declaration
  • Appropriation of Federal money
  • Proceeds of bonds approved by the voters
FY2024 Spending Subject to Limit
$ 1 B
Proposed Statutory Limit (SB 20)
$ 1 B
Proposed Constitutional Limit (SJR 4)
$ 1 B
Estimated Current Limit for FY2024
$ 1 B
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Supporting Documents

Click on each icon or title to view the document!

SJR 4: Official Document

The resolution which proposes changes to Alaska’s Constitution.

Sponsor Statement

One-page summarizing the intent of the proposal and why I believe this is necessary.

SB 20: Official Document

The Bill which proposes changes to Alaska’s laws relating to the spending cap.

SJR 4: Sectional Analysis

This document breaks down each individual change included in each section of SJR 4

Committee Slideshow

The most current slideshow, prepared for House Judiciary meeting on 10/15. Same slideshow as above.

SB 20: Sectional Analysis

This document breaks down each individual change included in each section of SB 20

Committee Meetings

10/15/2021: House Judiciary Committee

Summary:  This was an introductory hearing for HJR 401 / HB 4006. 

Duration: 1 hour, 46 minutes

Meeting Link: http://www.akleg.gov/basis/Meeting…

9/9/2021: Senate Judiciary Committee

Summary: This was the final hearing in this committee of SJR 301. This meeting saw some beneficial amendments to the proposal and the proposal passed out of committee without objection.

Duration: 1 hour, 46 minutes

Meeting Link: http://www.akleg.gov/basis/Meeting…

9/8/2021: House Ways & Means Committee

Summary: This was an introductory hearing for HJR 301 / HB 3001, the identical version offered in the third special session. The proposal was presented for the first hour followed by a great overview of appropriation limits and the different alternatives on the table by Legislative Finance

Duration: 2 hours 

Meeting Link: http://www.akleg.gov/basis/Meeting…

9/7/2021: Senate Judiciary Committee

Summary: This video is only the public testimony, which occurred for the first 12 minutes of this Senate Judiciary Meeting. The meeting moved to another agenda item after this testimony.

Duration: 12 minutes

Meeting Link: http://www.akleg.gov/basis/Meeting…

9/3/2021: Senate Judiciary Committee

Summary: This was an introductory hearing of SJR 301 sponsored by Senator Myers from North Pole.

Duration: 1 hour, 28 minutes

Meeting Link: http://www.akleg.gov/basis/Meeting…

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