Sec. 1. 5 MRSA c. 52 is enacted to read:

CHAPTER 52

STATE AND LOCAL GOVERNMENT EXPENDITURE LIMITS

§561.__Definitions

As used in this chapter, unless the context otherwise indicates, the following terms have the following meanings.

1. Inflation.__"Inflation" means the percentage change in the Consumer Price Index, as defined in Title 36, section 5402, subsection 1.

2.__Local government.__"Local government" means a municipality or a county.

§562.__State and local government expenditure limits

1.__State spending limit.__Except as provided in subsection 3, the maximum annual percentage increase in General Fund expenditures, excluding federal funds received by the General Fund, may not exceed inflation plus the percentage change in state population in the prior year.

2.__Local government expenditure limit.__Except as provided in subsection 3, the maximum annual percentage increase in the expenditures of a local government may not exceed inflation plus the percentage change in state population in the prior year.

3.__Two-thirds vote required.__The State or a local government may authorize an expenditure in excess of the limit established in subsection 1 or 2 only upon a vote of 2/3 of the entire elected membership of each House of the Legislature, in the case of the State, or upon a 2/3 vote of the governing body of the local government, in the case of a local government.

4.__Population determination.__For purposes of subsections 1 and 2, population must be determined by annual federal census estimates, and that number must be adjusted every decade to match the Federal Decennial Census.

§563.__Disposition of excess revenue

1.__State emergency reserve fund.__If the State collects revenue that exceeds the expenditure limit established for that fiscal year in section 562, subsection 1, as the first priority