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Voters Approve Most Bond Referendums - OK California's Prop 30

NOV 7, 2012 5:01pm ET
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CHICAGO — Voters on Tuesday said yes to more than 380 statewide, local government, and school bond measures amounting to more than $30 billion nationwide, while Californians passed the state’s budget boosting Proposition 30.

Voters delivered a mixed bag on non-bonding referendum as credit rating agencies were watching the vote closely, warning that many could have significant credit implications.

In California, voters approved Proposition 30, which will raise an estimated $6 billion annually for the state budget by increasing sales taxes and income taxes on the wealthy to maintain funding levels for education.

The proposition, a linchpin of Gov. Jerry Brown’s budget, had 54% of the vote. with all precincts reporting by Wednesday morning. If it had failed, “trigger cuts” built into the state budget would have cut school spending by $2.2 billion.

RBC Capital Markets LLC said the California vote would help “ease some of the credit pressure in that state.”

California Democrats were on track to gain supermajorities in both the Senate and the Assembly, which would give them the control needed to raise taxes unilaterally.

Voters nationwide were asked to consider more than 500 bonding measures for public kindergarten through 12th grade education, higher education, infrastructure, and environmental projects totaling from $34 billion to $36.5 billion, according to organizations tracking the measures.

At press time Wednesday, results were in on roughly 489 ballot measures amounting to $33 billion with 384 approved totaling about $30.1 billion, according to figures from Ipreo.

That was the fourth highest amount in the nation’s history but was down sharply from the last presidential election cycle in 2008 when $67 billion appeared on the ballot.

The biggest bond measures Tuesday were all approved. They included San Diego Unified School District for $2.8 billion, the Houston Independent School District for $1.9 billion, Arkansas for $1.3 billion, Miami-Dade County School Board for $1.2 billion, Chaffey Joint Union High School District in California for $848 million, the Metropolitan District in Hartford, Conn. for $800 million, and Coast Community College District in California for $698 million.

After Arkansas, the largest statewide questions were in Alabama: $750 million for economic development projects and in New Jersey where $750 million for higher education projects was sought. Both were approved.

Of the top 45 issues — all for more than $200 million — only two were rejected based on early results, including $497 million for MiraCosta Community College District in California and $289 million for Ocean View SD in Orange County. Results were still pending on one referendum in the top 45, according to Ipreo.

Bond referendums in presidential election years typically fare well and have enjoyed more than 80% approval rates in the last two although this year they faced headwinds from a focus on the nation’s debt load in the presidential campaign.

Statewide ballot measures — of which the largest fared well Tuesday – tend in general to do better. “Voters feel like they have a smaller burden for the debt because of the wider tax base,” said Richard Ciccarone, chief research officer at McDonnell Investment Management LLC.

At the local level, measures often stand a better chance in a presidential election than in other election cycles that often draw fewer voters.

“Taxpayers tend to be toughest when their property tax is impacted but in a presidential election when you have strong turnout a bond election is not left to just those strongly resistant taxpayers who come out to vote,” Ciccarone added.

 

RESULTS

 

California voters appeared likely to approve 15 bond propositions with authorizations of more than $200 million out of 19 on local ballots. Three propositions seemed likely fail and one was still undecided Wednesday morning. School districts proposed all of the bond measures to fund construction projects.

San Bernardino City Unified School District voters approved a $250 million bond measure and voters in Palmdale in Los Angeles County approved a $220 million bond issue for schools.

El Camino Community College District in Los Angeles County saw voters approve a $350 million bond issue and the Santa Monica-Malibu USD saw voters approve $395 million. In Los Angeles County voters approved $350 million for Cerritos Community College District and a $398 million bond measure for Grossmont-Cuyamaca Community College District in San Diego squeaked by with 56.51% in favor.

Los Angeles County voters defeated Measure J, the 30-year extension of a half-cent sales tax estimated to generate $90 billion to pay for a network of light rail and subways.

In Connecticut, a measure in the eight Metropolitan District Commission member communities in greater Hartford on whether to let the MDC bond for $800 million to complete the second phase of the clean water project passed easily. The $2.1 billion project primarily aims to curb the amount of sewage overflow into the Connecticut River and its tributaries, and lowering nitrogen levels discharged into the river.

New Jersey voters approved $750 million of general obligation bonds for higher education in the first voter-approved higher education bond issue since 1988. Proceeds will finance higher education capital projects to increase academic capacity in New Jersey.

In Maine, voters approved three out of four bond issues on the ballot Tuesday. About $65 million of bonds for transportation, drinking water, and land development projects were approved.

Texas voters were generous in their support of a series of large bond referendums. Houston Independent School Districtwon a $1.89 billion general obligation question that marked the largest request ever by a school district in Texas. Voters in Harris County also approved Houston’s $425 million GO bond plan and another $425 million of bonds for Harris County Community College District.

Dallas’s three-part $642 million GO bond package passed. The proposal, which will not require a tax increase, was the fourth bond request in Dallas in the past 14 years. Mayor Mike Rawlins said the city will pay for much-needed street and drainage projects with the proceeds.

More than 60% of voters in El Paso approved the city’s proposal for $473.3 million of GO borrowing, including $245 million for park and zoo projects and $223.3 million for a downtown multi-purpose event center and library and museum upgrades.

Voters also overwhelmingly favored an increase in the city’s hotel tax by 2% to 17.5%, the highest rate in Texas, to support $15 million of tax-exempt bonds and $35 million of taxable debt for a public-private stadium project. El Paso City Hall will be demolished to make room for a downtown minor league baseball stadium to be financed with the hotel tax revenue.

“Ten years from now, we won’t be able to recognize this city,” El Paso City Manager Joyce Wilson said. “We are redefining ourselves.”

Approval of a $255 million GO request by Northwest Independent School District north of Fort Worth will allow the district to build its third high school and sixth middle school.

Six proposals of a seven-part, $385 million bond referendum in Austin passed, but voters turned down a $78 million request for affordable housing efforts.

Arkansans approved a temporary, 0.5% increase in the state sales tax to support $1.3 billion of revenue bonds for highway work in the state. The tax authorized by Ballot Issue 1 will be levied July 1 and will last for 10 years or until the bonds mature. The measure will raise the sales tax rate to 6.5% from 6%.

A proposed amendment to allow economic development districts to finance projects with sales tax anticipation revenue bonds was defeated.

In Arizona, voters rejected an initiative to extend a 1-cent state sales tax to support education and human services. The three-year sales tax increase was approved in 2010 during a dramatic downturn in state revenue. 

In the Phoenix suburb of Glendale, voters refused to end a city sales tax increase to compensate for falling revenue and future subsidies for the Phoenix Coyotes National Hockey League team. Local businesses opposed the Glendale City Council’s decision to raise taxes while paying to keep the team playing in the $180 million bond-financed Jobing.com arena.  

Voters in Mesa, Ariz., Phoenix’s largest suburb, approved $230 million for school bonds and $70 million for parks and cultural facilities.

In Colorado, voters approved a $466 million general-obligation bond for the Denver Public Schools, the largest bond request in state history and the second major bond request by DPS in four years. 

In Oklahoma, Tulsa County voters decisively defeated a plan to extend a 0.6% sales tax to support up to $748.8 million of revenue bonds for economic development and capital improvements.

In the Southeast, voters fought long lines in Miami-Dade County to approve the largest-single bond issue allowing the Miami-Dade County School District to issue $1.2 billion of general obligation bonds for the nation’s fourth-largest public education system.

Across Florida, voters shunned most of the 11 constitutional amendments placed on the ballot by the Republican-led Legislature, and which contributed to massive backups at polls. Voters rejected a measure that would have placed new restrictions on state spending and refused to impose a major property tax overhaul that would have affected revenues raised by local governments.

In Richland County, S.C., voters appeared to narrowly approve a 1-cent transportation sales tax increase and a request to issue $450 million of GO bonds backed by the sales tax.

In Wake County, N.C., voters approved $200 million of GOs for new facilities and renovations at Wake Technical Community College, the state’s second-largest community college. Dayton, Ohio voters approved a $187 million library bond referendum.

In other non-bond questions on the ballot with financial implications, Michigan voters rejected all six controversial ballot proposals that would have brought sweeping changes to the state. Gov. Rick Snyder had campaigned for the last few weeks urging voters to reject five of the six, including measures that would require a legislative supermajority for new taxes and one blocking a $2 billion new trade bridge.

“From a Michigan perspective, it was a good night,” Snyder said Wednesday. “The constitutional proposals that went down could have derailed Michigan’s economic comeback. With a ‘no’ vote we can move forward.”

Voters also rejected a proposal to uphold the state’s emergency management law, a vote that Snyder said would make things more difficult for financially struggling municipalities across the state. Also in Michigan, voters rejected a tax increase to help raise operating funds for the struggling city of Allen Park, which Snyder just declared to be in a financial emergency two weeks ago.

In a statewide ballot measure in Illinois, a proposed amendment to the state constitution requiring a three-fifths majority of the General Assembly to approve enhanced public pension benefits fell short.

Missouri voters narrowly rejected a proposed hike in its cigarette tax to pay for public education and anti-smoking efforts.

South Dakota voters rejected a proposed 1% sales tax increase that would have generated $180 million annually for public education and state Medicaid reimbursements.

Ohio voters defeated — for the fifth time — a statewide question on whether to have a convention to revise or alter the state’s constitution.

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