The Senate passed its smart cap state revenue constitutional amendment on Tuesday. The amendment gradually reduces the state revenue limitation in the constitution through the 2018 – 2019 fiscal year, when, from that year forward, state revenues will be limited to an amount equal to the state revenue limitation for the previous fiscal year, multiplied by an adjustment for growth. Revenues that are collected in excess of the revenue limitation must be transferred to the budget stabilization (or “rainy day”) fund until it reaches its maximum balance. Thereafter, the excess revenues must be used to reduce the required local effort millage levy for public schools and ultimately, returned to the taxpayer. The existing revenue limitation was approved by the voters as an amendment in 1994 and is generally indexed to growth in personal income. In the years since the adoption of the amendment, state revenue has generally grown more slowly than personal income, thus negating the value of the amendment.