For the past ten years, Indiana has been committed to passing honest and responsible budgets. Indiana has earned its excellent fiscal reputation by upholding a simple idea – that we must spend no more than we take in. My fellow legislators and I believe it’s time to codify this approach in our state constitution by means of a balanced budget amendment.
Indiana is one of just seven states without a constitutional requirement for a balanced budget. While common-sense financial management has become a hallmark of Indiana’s economy in the last decade, passing a balanced budget amendment would ensure these principles remain the foundation of our fiscal policy for generations to come.
There is also important historical context to consider. As recently as 2004, years of unbalanced budgeting forced the state to delay payments to schools, local governments and universities.
This lack of fiscal discipline hurt Hoosier taxpayers. Independent credit rating agency Standard & Poor’s reduced Indiana’s credit rating twice between 2002 and 2004, causing school corporations and local entities to borrow at higher interest rates. Although we changed course and instituted strict fiscally responsible practices, we were under no constitutional requirement to do so.
Senate Joint Resolution 19 would add a balanced budget requirement to our constitution and help ensure the prosperity of future Hoosier generations. Under emergency circumstances, this restriction could be suspended by a two-thirds vote of the General Assembly.
The Great Recession put incredible strain on state budgets. Revenue forecasts were bleak, reserves were spent down and unemployment spiked. Despite all of this, Washington continued on its path of deficit spending and created another trillion-dollar entitlement program – Obamacare.
Fortunately, Indiana took a different approach. Thanks to the healthy budget reserves that we began accumulating in 2005, our state weathered the storm, met our financial obligations and did so without raising taxes.
Adopting a balanced budget amendment to our constitution would give Hoosiers peace of mind that future national economic downturns would also be addressed responsibly. It avoids budgetary gimmicks, and prevents court-ordered tax increases without approval from the General Assembly.
If SJR 19 passes the General Assembly this year, it would have to pass the legislature again in 2017 or 2018, and then be approved by a statewide voter referendum in 2018.
I believe that it is time to join the vast majority of other states across the nation and enshrine this tradition of sound fiscal policy into the Indiana Constitution.
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