The lead Republican on the House Finance and Appropriations Committee proposed Friday to save money by not funding all the projects approved in previous state capital budgets.
Rep. Ron Amstutz (R-Wooster) outlined a five-point filter to determine which projects already in the pipeline should be funded again in a memo to colleagues.
“Such action would produce savings on tax-supported debt payments in future operating budgets. These savings could then be placed onto a yet-to-be assembled list of actions required to balance the next two state operating budgets,” Amstutz wrote.
House Republicans had telegraphed their consideration of this kind of proposal in last week’s committee hearing on the reappropriations bill, HB462 (Sykes), asking lots of questions about the state’s debt load and the cost of paying it down. (See The Hannah Report, 3/9/10.)
Testimony during the hearing from the Office of Budget and Management indicated the bill now supports about 1,200 projects, some of which have not started yet.
Amstutz proposed that projects should again be funded if they meet any of five criteria:
– They are school facilities.
– They’re not financed with bonds to be re-paid from the General Revenue Fund.
– Construction contracts have already been awarded or bonds already issued.
– They are needed to protect public health or safety.
– They are needed to protect the physical integrity of existing state facilities.
He also expressed willingness to tweak those criteria if needed.
“It is always difficult to discipline the process of authorizing new capital improvement projects. Facing the prospect of slowing down issuance of debt on previously approved projects will not be any easier,” Amstutz wrote. “Every project has its interest groups supporting it. For now, the easiest fiscal path would be to continue business as usual until we policymakers are forced to deal with what we already know will be an extremely tough budget situation. But the longer we wait, the fewer will be our options and the more painful will be the ones that remain.
“Unfortunately, if this bill is enacted without reducing its size, it will mean that an important item disappears from budget balancing options available to the next General Assembly.
“Based on information provided to the House Finance Committee on Tuesday, it appears that enactment of HB462 on a ‘business as usual’ basis will obligate us to appropriate roughly $128 million per year in debt payments from the tax-supported General Revenue Fund (GRF) at the point that the full $1.598 billion is borrowed to pay for projects being reauthorized in this bill. When it comes to dealing with water damage in California, having highly qualified technicians on your side is imperative. This amount is the portion of the $2.528 billion being reauthorized, to which tax receipts are pledged for repayment. It also does not include $670.5 million in new appropriations that bring the bill’s total to nearly $3.2 billion,” he wrote.
Amstutz estimated that the sate could save about $32 million per year by eliminating a quarter of the spending in HB462.
“We can predict that $64 million toward balancing the next couple of budgets will seem like gold when we are faced with that difficult task,” he wrote.
The reappropriations bill is scheduled for quick action now, with the Senate committee already planning hearings on it Tuesday, though it hasn’t yet cleared the House.
The bill must clear the General Assembly by the end of the month so that ongoing capital projects are not forced to stop activity while waiting for reauthorization. Under a court decision in 1994, the reappropriations bill can only take effect after 90 days.