LOS ANGELES— Results of California's June 6 primary election demonstrate strong voter support for tax increases, a credit positive, according to a Moody's Investors Service report.
California voters approved 70 local revenue measures, including $5.8 billion of local government bonds out of a requested $6.5 billion across 48 measures on June 7, according to preliminary election results.
"The results demonstrate a credit positive trend of strengthening voter approval for local revenue measures; the passage rate was 79%, up from 67% in 2008," Moody's wrote. "The trend reflects increased voter willingness to support spending and capital improvement initiatives, which for general obligation (GO) bonds was particularly robust with voters approving 89.5% of measures."
The high passage rate for local revenue measures bodes well for November 8 general election outcomes and the credit positive effects of increased budgetary flexibility, new revenue streams and financing for capital needs, Moody's wrote.
K-12 and community college districts with tax-backed bonds continue to receive the highest levels of voter support; voters approved 40 of 45 GO bonds to fund school construction and facility improvements, representing the vast majority of bonds approved statewide.
Voters also approved all proposed school parcel taxes to boost operating budgets, ranging from $59 per parcel for Mammoth Unified School District to $802 per parcel for Lakeside Joint Union School District.
Parcel taxes strengthen local government credit profiles by expanding and diversifying operating revenue streams and demonstrate strong community support given a high required voter approval threshold of two-thirds, according to the report.
Under Proposition 13, parcel taxes are the only source of locally-controlled, general purpose tax revenue for most special districts, school districts and community college districts in California.