Legislative Action

Balanced Budget Amendment Ballot Question

This election there is one ballot question for all Indiana voters asking whether a balanced budget amendment should be added the Indiana State constitution. It reads as follows:

“Shall Article 10, Section 5 of the Constitution of the State of Indiana be amended to require the General Assembly to adopt balanced budgets for state government that do not exceed estimated revenues unless a super majority of two-thirds of the members of the House of Representatives and two-thirds of the members of the Senate vote to suspend the requirement?”

You might be wondering what this question is all about and what consequences a yes or no vote would have on Hoosiers.

First, here’s a bit of history on the Balanced Budget Amendment. The amendment was proposed by then Governor Mike Pence in his 2015 state of the state address. In order to amend the constitution, a majority in both houses of the Legislature must vote to approve the amendment in two consecutive legislative sessions which has happened already. Then, the amendment is put on the ballot to be approved by the voters. If the majority of voters are in favor, the amendment becomes part of the constitution.

This amendment would mean that to pass a budget where expenditures are greater than estimated revenues, a two-thirds supermajority would be required instead of the current simple majority.

On the surface, a balanced budget might seem like sound fiscal policy but there are a few reasons why it might not be so simple.

1.     It will reduce spending flexibility.  This is probably the most critical consequence to consider. In times of reduced revenues due to things like economic depressions, it will be harder to fund critical government programs and social services through typical means like accessing Indiana’s rainy day fund.

2.     It is redundant.  The Indiana Constitution already prohibits the state from going into debt. This was added when the Constitution was rewritten in 1851 after the state nearly went bankrupt after borrowing heavily to build the Wabash and Erie Canal.

3.     It may put public servants’ pensions at risk.  Some organizations such as the Indiana Coalition for Public Education are concerned that the amendment will make it more likely the state will borrow or take money from pension funds for public servants such as firefighter, police officers, and teachers to make up for any budget shortfalls. Republican State Senator Jeff Raatz and others claim that it will actually make it harder to do so since it will take a two thirds majority vote instead of a simple majority to transfer pension funds to the operating budget.