BALANCED BUDGET AMENDMENT S.J.R. G (S-1): FLOOR ANALYSIS
Senate Joint Resolution G (Substitute S-1 as reported) Sponsor: Senator Michael J. Bouchard
Committee: Finance
The joint resolution would ratify a proposed amendment to the U.S. Constitution that would require a balanced Federal budget for the fiscal year 2002, or the second fiscal year after ratification, whichever was later. The proposed amendment would become valid if ratified by the legislatures of three-fourths (38) of the states within seven years after the date of submission to the states.
As contained in Senate Joint Resolution G (S-1), the proposed amendment provides that total outlays for any fiscal year could not exceed total receipts for that fiscal year unless three-fifths of the members of both houses of Congress voted to provide by law for a specific excess of outlays over receipts. Further, the limit on the debt of the United States held by the public could not be increased unless approved by a three-fifths vote in each house. No bill to increase revenue could become law unless it was approved by a majority of the members of each house of Congress.
Congress could waive the restrictions in the proposed amendment for any fiscal year in which a declaration of war was in effect, or for any fiscal year in which the United States was engaged in military conflict that caused an imminent and serious military threat to national security.
Legislative Analyst: G. Towne
The passage of Senate Joint Resolution G (S-1) would have an indeterminate fiscal impact on State and local government in Michigan. The direct impact would be determined by the course that the United States Congress and the President took to achieve a balanced Federal budget. The State currently receives over $7.0 billion of direct Federal aid that is appropriated in the Michigan State budget. Assuming that a Federal balanced budget amendment could result in reductions in some aid to states, a portion of this Federal aid to Michigan could be reduced. The exact amount would depend entirely on future action taken by the President and Congress.
The passage of a Federal balanced budget also raises concerns to the State involving State tax authority. For example, if Congress enacted an increase in Federal taxes on cigarettes and gasoline in an effort to raise revenue to balance the budget, these Federal changes could lead to reductions in the consumption of cigarettes and gasoline, which would reduce Michigan State tax revenues.
The final point of the balanced budget amendment involves the issue of the impact of the amendment on the national economy. To the extent that the amendment could lead to reductions in interest rates, the economic impact could be positive. To the extent that the balanced budget amendment limited the ability of the Federal government to stimulate the economy through fiscal policy in an economic downturn, the economic impact could be negative.
Date Completed: 3-1-95 Fiscal Analyst: G. Olson
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This analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official statement of legislative intent.