CHICAGO — Voters in the Midwest head to the polls Tuesday to decide the fate of a handful of finance-related ballot questions and the leadership of eight states, including several where debate over fiscal pressures is taking center stage.
Michigan's closely watched gubernatorial campaign has incumbent Gov. Rick Snyder, the architect of Detroit's bankruptcy, facing former Democratic congressman Mark Schauer in a race that has become a statistical dead heat.
The bankruptcy of the state's largest city has been a campaign issue, with Snyder defending the move as necessary and saying Detroit's future is now brighter than it has been in decades. Schauer has criticized Snyder for authorizing the bankruptcy and putting Detroit, as well as several other cities, under state control.
Snyder and others involved in the Chapter 9 process had hoped for a ruling on Detroit's bankruptcy plan ahead of the election. Instead, U.S. Bankruptcy Judge Steven Rhodes has said he would rule Friday, Nov. 7.
Despite the timing, Snyder has touted the speed of the case and a restructuring plan that allows Detroit to shed $7 billion of debt. Both candidates have campaigned heavily in the Motor City, a traditionally Democratic city, to win votes.
Michigan's economic rebound since 2010 has also played in Snyder's favor, polls say, while Schauer leads among seniors still angry about Snyder's decision to reduce their property tax credits and to tax pensions.
In Illinois, the outcome of the governor's race could dramatically impact the state's fiscal picture. If re-elected, incumbent Gov. Pat Quinn, a Democrat, is expected to press lawmakers to make permanent temporary income tax rate hikes approved in 2011.
The personal rate of 5% will fall to 3.75% on Jan. 1, resulting in the loss in billions of dollars in revenue. Leaders of the legislature's Democratic majorities have said they will press for passage of Quinn's proposal after the election.
Quinn's GOP challenger — businessman Bruce Rauner — wants to let the rates roll back as scheduled and says he would overhaul the tax code to raise some additional revenue, cut spending, and work to improve the state's economic climate.
"He has a plan to give himself a million-dollar tax cut while slashing the education budget of this state," Quinn said in a recent debate. "I'm against giving tax cuts to the wealthy and hurting our schools," Quinn said.
"We have a massive economic failure in Illinois. Gov. Quinn, he's running on scare tactics," Rauner countered, saying he would bolster education funding. "The truth is Illinois is failing on jobs, failing on taxes."
Rating agencies and investors are watching closely. The state is the rated the lowest among its 49 counterparts at the A-minus level with a negative outlook. Its credit deterioration has been driven by its structural budget woes and $100 billion of unfunded pension obligations.
Lawmakers overhauled the pension system last December but the changes face a legal challenge by unions. The has cut its bill backlog in half in recent years, but the $5 billion owed could rise again if new revenue is not found or deep spending cuts made.
In Wisconsin, incumbent Republican Gov. Scott Walker faces Mary Burke, a businesswoman who serves on the Madison school board and served in former Gov. Jim Doyle's administration. A projected $1.8 billion gap in Wisconsin's next two-year budget has given Democrats fodder for arguing that the governor painted too rosy a picture of state finances when he pushed through a $540 million tax cut package. The cuts came after the state announced a $1 billion surplus in the current budget cycle.
Other gubernatorial contests include those in Iowa, where incumbent Republican Gov. Terry Branstad faces Democrat Jack Hatch, and Minnesota, where incumbent Democrat Mark Dayton faces Republican Jeff Johnson. In South Dakota, incumbent Gov. Dave Daugaard, a Republican, enjoys a strong lead over Democratic challenger state Rep. Susan Wismer.
In Ohio, incumbent Republican Gov. John Kasich faces Democrat Ed Fitzgerald, the executive of Cuyahoga County, whose campaign has struggled from scandals.
Among other issues, the candidates have debated how best to tax the state's young oil and gas fracking industry, which is expected to grow significantly over the next several years. Kasich has said he will push to significantly increase taxes and regulations on oil and gas producers if he wins a new term. Kasich has tentatively proposed a 4% severance tax, saying he would use the money for tax cuts for Ohioans. Fitzgerald opposes the tax because it could discourage drillers from working in certain areas in the state.
In Nebraska, Democrat Chuck Hassebrook, the former director of the Center for Rural Affairs, is facing Republican Pete Ricketts, former chief operating officer of Ameritrade, in a contest to replace outgoing two-term Gov. Dave Heineman. The fate of the controversial Keystone XL pipeline has been part of the campaign, with Hassebrook opposing it and Ricketts saying it will bring jobs and money into the state.
"Fitch does not expect the outcome of any of the gubernatorial elections or ballot measures to have a direct effect on state ratings given the scope of state government and its general stability," analyst Laura Porter, a Fitch managing director, wrote in a recent special report.
Illinois voters will weigh in on an advisory referendum as to whether the state should consider imposing a 3% surcharge on incomes of more than $1 million which could raise an estimated $1 billion annually.
In Kansas City, Missouri, voters will vote on a quarter-cent sales tax hike that would be imposed for 25 years to fund capital improvements, and a one-eighth-cent sales tax for public transportation.
Indiana voters will weigh in on a new treasurer, who plays a prominent role in the management of the triple-A rated state's finances. Two-term treasurer Richard Mourdock, a Republican, resigned in September, four months before the end of his term, in a move some say allowed him to avoid cuts in retirement benefits.
Gov. Mike Pence appointed Dan Huge, chief financial officer of the Indiana Finance Authority, as interim state treasurer. In the running to replace Huge are Democrat Mike Boland, Republican Kelly Mitchel, and Libertarian Mike Jasper.
In North Dakota, voters have spent the last few years weighing in on various ways to spend the state's record influx of oil-related revenue, and will do so again this election. Measure 5 asks voters whether the state should set aside 5% of oil and natural gas extraction tax revenue for the next 25 years for conservation efforts such as clean water. If approved, the move could generate up to $150 million a year.
South Dakotans will consider a proposal authorizing the Legislature to expand gambling in the city of Deadwood and on reservations.
In Missouri, a constitutional amendment before voters would curtail Democratic Gov. Jay Nixon's powers to withhold budgeted spending without legislative approval — a power cited as a credit strength — when revenues fall short. Republicans who control the legislature pushed to put Amendment 10 on the ballot. The amendment would give the legislature the ability to override the governor's withholding actions with a two-thirds vote.
In Wisconsin, a constitutional amendment will be decided banning the diversion of transportation fund revenues for other spending purposes. Past administrations and legislatures have siphoned off more than $1 billion for other purposes.
