Midwest Voters Stingy About Loosening Their Purse Strings for Debt

bb110410map-800px.jpg

CHICAGO — Midwestern voters were generally stingy with their pocketbooks this election day, approving about half the borrowing requests on the ballot, while embracing measures that impose tax restrictions on various legislative bodies.

As expected, Indiana voters embraced a constitutional amendment to make property-tax caps permanent. The move is expected to mean pain for local governments across the state that depend on property taxes for a big chunk of their budgets. Many are already struggling with major drops in the revenue source since the property-tax cap law was enacted in 2008.

Making the tax caps part of the constitution means local governments — especially urban cities like Gary that have been hit hardest — can no longer petition the state for relief.

The amendment is also expected to perpetuate a chill on local government borrowing. The tax-cap law requires that issuers win voter approval for all significant debt issues, which supporters touted as a reason for the law.

Midwestern voters approved 58 of the 116 bond referendum before them Tuesday, or about $1.2 billion of the $2.4 billion sought. The 51.3% approval rate was far below the 65% level of support in other regions, according to Thomson Reuters.

Two community colleges bond referendum won approval. In Illinois, voters in DuPage Community College District 502, just west and southwest of Chicago, endorsed the sale of up to $168 million of bonds for major campus renovations.

“We are looking at taking down a 40-year-old, temporary building, renovating our library and portions of our physical education building, and addressing a shortage of parking on campus,” said college treasurer Thomas Glaser.

A bond restructuring last year will allow the college to issue the new debt without raising its tax rate.

In Wisconsin, voters in the Madison Area Technical College district ­approved up to $133.8 million of debt to fund ­expansion projects at its various campuses. The projects include a new health education center and clinic, and additional police and fire training facilities.

Voters in North Dakota approved a statewide ballot measure requiring the state to put 30% of oil-extraction and gross-production tax revenue into a type of permanent savings account dubbed the Legacy Fund.

Legislators are unable to dip into the account until 2017. Officials estimate the fund could capture up to $600 million in new revenue over the next two years.

Voters in Iowa embraced creation of a Natural Resources and Outdoor Recreation Trust Fund to pay for outdoor recreation and conservation projects. It will be funded with $150 million raised annually from an 0.375 % sales tax increase.

Voters in counties with casino gaming renewed their support for the revenue-generating enterprises. Under state law, voters in the counties housing its 17 casinos must vote on their legality every eight years.

Missouri voters approved Proposition A requiring St. Louis and Kansas City to ask voters next spring to approve the continued collection of a 1% earnings tax. The two cities are the only ones to impose the tax. A majority of St. Louis voters rejected it, but Kansas City voters and those statewide supported it. The referendum bans the tax from being imposed on additional cities.

If local voters reject the tax in 2011 it will be phased out over the next decade. If they approve it, the cities can continue collecting the tax, but it must be renewed every five years.

Representatives of both cities have warned that the demise of the tax — which generates $200 million annually for Kansas City and $140 million for St. Louis — could have a dire impact to their budget and credit ratings.

Kansas City voters renewed for 15 years a quarter-cent sales tax that will raise $261 million for new police stations, a crime lab and other public safety improvements.

Iowa voters rejected two local bond questions while Ohio voters rejected 94% of the $516 million requested. Michigan voters cleared just three of 10 requests, or $34 million. Minnesota voters approved two of five measures.

Missouri voters were on the other end of the political spectrum, approving 93.9%. Nebraska approved 90.6% and Indiana approved 78%.

Illinois voters signed off on $414 million of bonding for a 66.2% approval rate while Wisconsin voters endorsed $179 million worth of borrowing, for a 63.8% approval rate.

For reprint and licensing requests for this article, click here.
MORE FROM BOND BUYER