Many of Tuesday's referendums across the United States will have major implications for state and local credit conditions and bonds.

Tuesday's ballot will have voters decide on the fourth largest bond election ballot in United States history. They will vote on bonds totaling about $35.4 billion, according to data from October 23. There will be at least 536 bond referendums nationwide.

Only 2006 ($78.6 billion), 2008 ($67 billion) and 2002 ($47.1 billion) had larger bond totals on ballots.

The five biggest bond elections on Tuesday are the San Diego Unified School District ($2.8 billion), the Houston Independent School District ($1.9 billion), Miami-Dade County School Board ($1.2 billion), Chaffey Joint Union High School District, California ($848 million), and the Metropolitan District, Hartford, Conn. ($800 million).

The biggest statewide questions are in Alabama, $750 million for economic development projects and in New Jersey, $750 million for higher education projects.

The San Diego bond would be used for renovating and modernizing schools, new school construction, classroom technology and technology infrastructure, and charter school renovations and expansions. If it passes, homeowners will see an increase of property taxes of $60 per year for every $100,000 of a home's assessed value.

The Houston school district hopes to use the bond proceeds to renovate, rebuild or replace 38 schools as well as for other education purposes. "We know these buildings are going to have to be replaced," said Houston Independent School District superintendent Terry Grier to KHOU 11 News. "It's just a matter if it's now or it's later. Right now, interests rates are at their all-time low in the area."

The bond would come with a property tax hike that would cost owners of $200,000 home $70 a year.

In other referendum-related news, Fitch Ratings has released a report on state referendums that may potentially affect states' credit. "In addition to numerous bonding authorizations and initiatives against the individual mandate provisions of federal health care reform, proposals include gaming expansions and a variety of tax increases and tax limitations," wrote analysts Laura Porter and Maurice Stam.

The analysts discuss referendums on California tax increases, Florida revenue limits, Idaho collective bargaining, Illinois limits on new pension benefits, Michigan reform measures, Oklahoma tax limits, Oregon taxes and "kickers," Washington tax and debt limits, and Arizona tax extensions and limits.

There are two competing tax increase proposals on the California ballot, Proposition 30 and Proposition 38. If a majority of voters approve both, whichever measure gets the most votes would be enacted. Both 30 and 38 would increase income taxes and 30 would also increase the sales tax for four years. Money from 38 could only be used for childhood education and debt service. If neither passes or 38 passes, cuts in California government spending of about $6 billion would be automatically triggered. Proposition 38 would only provide school revenue starting in Fiscal 2014. "For schools, Fitch expects fiscal 2013 trigger cuts, if enacted, to aggravate California school districts' already weak funding environment and pressured liquidity," the analysts wrote in their report, "A Busy November Ballot for States."

Also on the California ballot is Proposition 31, "which would alter the operating procedures of state government by implementing a two-year budget cycle, allow the governor to make budget cuts during an emergency if the legislature fails to act, mandate performance reviews and goals, and proscribe new expenditures over $25 million without offsetting revenues or spending cuts."

In Michigan, voters will vote on Proposal 5, which "would amend the state constitution to require either a two-thirds supermajority in the legislature, or a statewide, simple majority vote in order to raise state tax rates or change the tax base," the analysts wrote. "Fitch believes that strict constitutional operating limitations are a credit negative to the extent that they reduce financial flexibility."

Oregon government currently returns corporate taxes if they generate revenues that exceed projected collections by 2% or more. Measure 85 would end this corporate "kicker" and use the funds for education. Fitch treats the "kicker" return of taxes as a credit negative.

In Washington voters will consider Initiative 1185, which would require a legislative supermajority or voter approval to raise taxes. The initiative is similar to Initiative 1053, which was passed in 2010. "As any law approved by voters through initiative in Washington can be amended or repealed by a simple legislative majority after the first two years, the new initiative is designed to maintain the higher bar for another two years," the analysts wrote. The presence of the earlier provision "limited the state's options in responding to weak revenue performance in the recession."

Finally, in Arizona voters are considering Proposition 117, which would do two things. First, it would limit assessed property values to a maximum of 5% annual rate of growth beginning in 2015. There is currently a less strict limit on growth.

Second, the proposition would simplify the state's property tax system from using two values to using one value. "Fitch believes the primary effect of this proposition would be to further limit the debt capacity of local governments, which are limited by state constitution and statute to debt totals at certain percentage of taxable value. A number of local governments are approaching or are at these caps as a result of the dramatic declines in taxable values over the past several years."

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