What Happens If Revenues Exceed the Limit? If
revenues exceed the limit, the excess amount would
be divided proportionally among the General Fund
and each of the state’s special funds.

The net impact of this measure on expenditures
over time would depend on whether the state were
able to “set aside” enough reserve funds during
revenue expansions to maintain spending during
periods of revenue softness.
• If it were able to set aside sufficient funds, the main
impact of the spending limit would be to smooth
out spending over time—restraining spending
during economic expansions and permitting
additional spending (supported from its reserves)
during revenue downturns. In terms of Figure 3,
this means that enough reserves would need to
be set aside during the “excess revenues” period
to maintain spending at the limit during the “low
revenues” period.
• However, if the state were not able to accumulate
large reserves, the limit would likely result in less
spending over time. This is because the state would
not have enough reserves available to cushion the
decline in revenues during bad times. When this
occurred, the reduced level of actual spending
during periods of low revenues would then become
the new, lower, “starting point” from which the next
year’s spending limit is calculated. This could cause
the spending limit to ratchet down over time.

Wishing I could pay my bills like governments do