Monday, June 27, 2005

Limiting Growth of Government

Michigan Senator Nancy Cassis has introduced a bill to amend the state's constitution to limit the growth of state government. While there is already a constitutional provision (known as the Headlee amendment) limiting the amount of revenue the state may take in, this bill would limit the state's spending growth. The bill, called Senate Joint Resolution D, limits annual total state spending growth to the previous year's spending, plus the inflation rate, plus the state population growth rate.

This bill takes the previous year's spending and starts from there for the following year's spending limit. For instance, if the state spent $30 billion in 2002 and $29 billion in 2003, the state can increase spending a maximum of the inflation rate over the 2003 spending level rather than increasing from the highest previous point. If the inflation rate was 3%, then 2004 spending would be limited to approx $29.8 billion.

We think this is an outstanding idea. It would force constraint upon the politicians and limit government. Of course, many of the politicians will whine and complain that they won't be able to spend like crazy when the economy is good, but that's the point.

Michigan is a high tax state and jobs are fleeing like there's no tomorrow. Jobs are going to states that have low taxes and a better labor environment. This bill would address the state's insatiable appetite for taxes and begin to address the business environment problem.

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