Northeast Voters Face $1.69 Billion

Voters in various states in the Northeast on Nov. 4 will be asked to approve more than $1.69 billion of debt, including bonds for clean water, preservation of open space, school construction, and roads.

Massachusetts voters will consider a question to do away with the state's personal income tax, voters in Maryland will decide on a gambling initiative, and voters in New Jersey will weigh in on the state's reliance on appropriation-backed debt.

Currently in the Garden State, general obligation and revenue debt must go before the voters, yet of New Jersey's $32 billion of outstanding debt, nearly $20 billion was issued through authorities and corporations and without voter input. With debt service costs reaching $2.8 billion, accounting for nearly 8% of the fiscal 2009 budget, public opinion has looked toward scaling back on borrowing.

Voters will have the chance to do just that if they pass a referendum that would amend the state constitution so that all future state-backed, non-revenue debt would go before voters, including bonds sold through authorities.

New Jersey voters last November expressed their dissatisfaction with heavy borrowing when they rejected a $450 million stem-cell research bond bill and passed a $200 million open space initiative, an issue that typically gains wide support, by a tight 54% to 46% margin.

Massachusetts voters have the option to end their 5.3% personal income tax. Question 1 would cut that tax in half Jan. 1 and then end the tax a year later. Two recent polls on Question 1 indicate that a majority of voters do not support eliminating the income tax.

In 2002, voters rejected an earlier initiative to eliminate the tax, but the referendum did receive 45% of the vote and the current softening economy could make ending the income tax appealing for more voters. The tax brings in about $12.5 billion to the state's coffers and accounts for 40% of its total budgeted revenues.

Numerous labor unions, nonprofits, and civic groups have thrown their support behind the Vote No On Question 1 campaign.

Rhode Island has a Question 1 of its own, and that has resulted in some confusion between its referendum and Question 1 in Massachusetts. Every two years Rhode Island residents have been considering bonds that provide a 20% match for federal highway trust funds, primarily for road and bridge work but also for commuter rail funding.

This year, Rhode Island's Question 1 asks voters to approve $87.2 million of bonds that would be issued as a general obligation of the state. Meanwhile, advertising for the Vote No On Question 1 campaign has trickled over the border. Rhode Islanders are close enough to Boston to be in that media market, and consequently have been blitzed by television ads about Question 1 in Massachusetts.

"There have been public service announcements pretty extensively in the media telling voters to vote no on Question 1," said Michael Lewis, director of the state's Department of Transportation. Rhode Island has reached out to voters to explain the difference and the Massachusetts ads were changed to identify which state they refer to, he said.

"There should be time between now and the election to clear that up, but it certainly was confusing," Lewis said. "Without the bonds we would not be able to access our federal apportionment, and those federal dollars, $220 million a year or $440 million over two years ... would be dispersed back to the states and our construction program would stop."

Pennsylvania voters will decide on a $400 million water and sewer infrastructure GO bill that would support grants to municipalities and local authorities for clean water capital projects. The Pennsylvania Infrastructure Investment Authority would then allocate the bond proceeds through grants and loans to cities and towns.

PIIA executive director Paul Marchetti said the referendum, if passed, would help the agency support additional capital plans.

"We have projects coming in all the time, just as a natural course of business," Marchetti said. "It's just that this would make it possible to get to more projects than we would otherwise."

A Sustainable Water Infrastructure Task Force is currently assessing Pennsylvania's water and sewer facilities and estimating the cost of bringing clean water and sewer systems to a state of good repair. Gov. Edward Rendell's administration has pegged those costs at over $20 billion over the next 20 years.

Pennsylvania voters approved earlier GO water bond bills, including a $625 million Growing Greener referendum in 2005 that included water and sewer upgrades.

At the local level, cities and towns will weigh in on $80 million of debt, including a $30 million open-space bond bill in Upper Dublin Township in eastern Pennsylvania. While open-space initiatives often have popular support, Upper Dublin's director of finance, Jonathan Bleener, said officials will have to wait and see how voters react to the bond proposal.

"Not too many fail, but in this economy, who knows?" he said.

Rhode Island voters also face a referendum on $2.5 million of bonds to purchase easements and land to preserve open space. The state, which goes out with a similar referendum every two to four years, will get three to one federal matching funds if voters approve the measure.

Voters in the Rhode Island town of East Greenwich will consider a $52 million bond issue that would pay for the construction of a new middle school to replace the 1950s-era one they have now. Voters nixed a $35 million bond issue in 2005.

Town manager William Sequino Jr. said there is no organized opposition this time and people realize the town needs a new school. If the issue passes, East Greenwich plans to sell bond anticipation notes and fix out the debt with bonds around 2013, after it has received a 30% reimbursement from the state for construction costs.

Maryland counties and cities are asking voters to approve nearly $800 million of bonds on Nov. 4.

Prince George's County voters will face $362.8 million of bonds to finance construction and renovations of county buildings and fund roads and bridges.

Baltimore city residents will vote on $261.4 million of debt for schools, the Maryland Science Center, the Maryland Zoo, the National Aquarium, parks and recreation, and economic development.

And Baltimore County voters will decide on $313 million of bonds for various projects, including $105.2 million for schools, $84.4 million for roads, bridges, and storm drainage systems, and $30 million for community colleges.

Maryland Gov. Martin O'Malley is seeking voter approval of slot-machine gambling. Voters will decide whether to amend the state's constitution to allow 15,000 new slot machines in Baltimore and other counties. The governor has been banking on revenues from slots to partially fund education and to fill a revenue hole in the fiscal 2009 budget.

Maine has a single statewide referendum for $3.4 million for clean water and waste water projects. The issue comes before the voters every year or two and brings a five-to-one federal match.

"Maine voters are usually very supportive of environmental bonds in general," said Maine Department of Environmental Protection commissioner David Littell. "That federal match has a positive effect regardless of whether it's environmental or not."

While a handful of towns in Connecticut are holding referendums for small bond issues, the town of Rocky Hill is holding the largest referendum in the state. It will ask voters to approve $71.1 million that would finance the demolition of an elementary school and construction of a replacement as well as renovations at two other schools.

Voters in the western New York town of Aurora will consider a $2.5 million bond issue for open space preservation. The proceeds would be used to buy easements restricting development on property in the town.

A $2.1 million bond referendum in Hinesburg, Vt., that would finance an upgrade of the town's wastewater facility may face an uphill battle. The facility's biggest customer, food manufacturer Saputo Inc., last week announced it would not reopen a cheese factory that was damaged by fire in September.

A similar referendum that would have expanded the wastewater facility and would have been supported by property taxes failed last year. The new plan scaled back the expansion and would be supported by fees, but without Saputo it's not clear the town of 4,600 can support the bonds, according to town administrator Jeanne Kundell Wilson.

"What we're hoping is another company goes into that space and starts production," she said.

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