Arizona Becomes 5th State To Enact Federal Balanced Budget Amendment Compact

Gov. Doug Ducey yesterday signed legislation making Arizona the fifth state to join a national movement dedicated to enacting a state-of-the-art constitutional balanced budget amendment.

The Compact for a Balanced Budget, HB2226, enters Arizona into an interstate compact that both organizes a convention of states for proposing a specific pre-drafted balanced budget amendment and simultaneously commits each state in the compact to ratifying that amendment and following the steps involved in the amendment process.

Arizona joins Alaska, Georgia, Mississippi and North Dakota in this formal agreement to amend the U.S. Constitution. Once 33 more states enter into the compact and Congress signals its approval, a Balanced Budget Amendment could be added to the U.S. Constitution in as few as six weeks and one day.

“This is the fastest, safest way to roll back unsustainable spending,” said Nick Dranias, president of the Compact for America Educational Foundation, Inc., “There’s no risk of a runaway convention and we can get to the finish line of disciplined spending and less debt for our children a lot faster.”

The legislation, which has gained national attention from George Will, Stephen Moore, Grover Norquist and other public policy experts, contains several key elements in its powerful, yet plausible, amendment:

  • A constitutional debt limit would  cap federal debt at 105% of the outstanding debt at the time of ratification.
  • In order to authorize additional debt, Congress would need approval from a majority of state legislatures.
  • Cash-flow-out cannot exceed cash on hand except for borrowing authorized under the new constitutional debt limit.
  • Deficit funding of wars, national emergencies, military conflicts, weather events, normal business cycle downturns, and debt obligations to the Social Security, Medicare, and other trust funds would be allowed.
  • Any new income or sales tax would require two-thirds approval of both houses of Congress, excepting measures that close loopholes or completely replace the income tax with consumption (end-user sales) tax and leaving untouched the current constitutional rule for unspecified revenue measures, such as tariffs and fees.
  • The amendment would prove a glide path to true balance over the next 6-8 years.

Former Alaska Lt. Gov. Mead Treadwell, chair of the oversight commission organized under the Compact for a Balanced Budget, said the bill is under consideration in a number of other states: “Arizona is well known as a bellwether state in terms of public policy. The leadership shown by Governor Ducey and the legislative leadership in Arizona will help other states, such as Texas and Missouri, see that this is an important, necessary measure to avoid fiscal calamity.”

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