Reflecting the off-year election and the public's growing resentment of heavy debt burdens, only $6.04 billion of bond proposals will be on state and local ballots tomorrow -- the lowest amount since 1985.
This year's bond slate, which includes 215 separate issues, is roughly half the $11.81 billion that was on last year's Election Day ballot, the third-highest in the post-World War II period. The election data are based on information available to The Bond Buyer as of last Thursday.
On this off-year ballot, only two states, new Jersey and Virginia, will be electing governors and legislatures -- and Virginians will be voting only on their House of Representatives.
No state treasurers are up for election this year. Next year, 25 of the 49 popularly elected state treasurers will face the voters. [Montana's treasurer is appointed.]
Major cities electing majors tomorrow include Cleveland. Charlotte, N.C., Cincinnati, Detroit, Miami, Minneapolis, New York City, and Seattle.
"Welcome to 1994," said Robert Chamberlin, senior vice president of municipal research and marketing at Dean Witter Reynolds Inc. "You could say that this is the next chapter in the evolution of the municipal bond market. The sentiment of the public is not positive. And with the heavy concerns about operations, you can't gain the public's confidence."
Although near-record amounts of bonds have been placed on Election Day ballots in the 1990s, voter approval has fallen far short of the percentages achieved during the 1980s.
So far this decade, voters approved 40.6% in 1990 -- the lowest since 1975's postwar low of 9.5% -- 70.2% in 1991, and 62.1% in 1993. However, throughout the previous decade [with the sole exception of 1981] voters routinely approved at least 80% of the general election proposals. The peak was reached in 1988, when 92.4% of the bonds on the ballot were approved -- the highest percentage since 1951.
"This is happening when you would think people would be more inclined to approve more debt because interest costs are so low," Chamberlin said. "But we're seeing that that is not enough to induce approval of further financing. Therefore, the volume of issues on the ballot is smaller, and the [dollar amount] will be small to mid-size issues as opposed to the capital-intensive ballot issues in the 1980s and early 90s."
This year, only 35 governments have more than $20 million on the ballot, and only 10 of them have more than $100 million. The biggest of the lot is a $1.9 billion slate on the Texas state ballot, which comprises $1 billion for corrections and mental health institutions, $750 million for the Veterans Land and Housing Funds, $100 million for the Agriculture Fund, and $50 million for economic development.
The makeup of the upcoming issues on the ballot also "give a clear picture of the demand for public facilities," Chamberlin said.
School bond issues continue to dominate the ballots, with 85 deals totaling $2.23 billion. They are followed by 17 general purpose and miscellaneous issues, totaling $2.13 billion, and 77 public facilities issues, totaling $967 million, for libraries, jails and prisons, fire and police stations, stadiums, parks, and other recreational facilities.
"There will be plenty of financing by other means, but this is a dark omen for those looking for greater issuance," Chamberlin concluded.
With an off-year election, initiatives, referendums, and amendments are down considerably as well. The following describes some of them, as well as some of the bond ballot issues:
* California
Proposition 170 would authorize majority vote approval, rather than the currently required two-thirds vote approval, for general obligation bonds issued by school districts, community college districts, and county offices of education. Proceeds could be used only for construction or rehabilitation of schools. The two-thirds voter requirement for local bonds has been mandated by the California constitution since 1879.
The California Debt Advisory Commission said 84% of local GO bond measures for education in six recent elections received 51% or more of votes cast, but failed because the law requires a two-thirds vote.
Proposition 172 would permanently extend a statewide half-cent sales tax. Revenues, estimated at $714 million in the current fiscal year and $1.5 billion annually thereafter, would be used for local public safety activities.
Showing bipartisan unity, the California Legislature and Gov. Pete Wilson placed the measure on the ballot as a way to offset part of the $2.3 billion in county and city revenue losses resulting from adoption of the state's fiscal 1994 budget. The sales tax would permanently offset about 65% of the statewide property tax shift by counties and cities to schools.
Proposition 173, known as the California Housing and Jobs Investment Bond act, is designed to address the state's housing crisis. The measure would allow the California Housing Finance Agency to sell $185 million in authorized, but unsold, bonds remaining under the First-Time Home Buyers Act of 1982.
The bond issuance would provide startup funding for the California Housing Loan Insurance Fund, a new mortgage insurance program administered by the housing finance agency.
The $185 million in bond funds would allow mortgage insurance to be provided for 5,000 to 10,000 first-time home buyers each year. The funds would allow the buyers to qualify for home mortgage loans with down payments as low as 3%.
Proposition 174, the school voucher initiative, is probably the highest-profile and most controversial ballot measure facing California voters Nov. 2. The proposed constitutional amendment would require the state to provide a $2,600 voucher to every school-age child who attends a voucher-redeeming private or public school.
Standard & Poor's Corp. said approval of the initiative would have an uncertain financial impact on the state because no one can predict how many students would transfer to the voucher-redeeming schools. But the rating agency said, "No immediate dramatic change in credit quality is likely to occur."
* Colorado
Although there are a large number of local tax questions to be answered by tomorrow's vote, the only statewide issue is a 0.002% sales tax to promote tourism.
The tourism tax will be the first statewide test of Colorado's spending and tax limitation, Amendment 1. The amendment, passed by voters last year, requires a vote of the people for tax increases that benefit certain organizations and if the increases surpass the rate of inflation.
The passage of Amendment 1 killed the tourism tax, which had been in effect for the past decade. It raises $12 million a year that the Colorado Tourism Board spends on national and international advertising and promotion of Colorado.
Proponents argue that a no vote would leave Colorado the only state without a state-supported ad campaign. Opponents say tax dollars should not be used to support ski areas owned by corporate conglomerates. Polls show a close vote.
In some districts, especially those south of Denver, voters are deciding as many as a dozen taxing issues, from fire and sanitation districts to local sales tax increases. And Castle Rock, Aspen, and Vail must get voter approval to keep from refunding excess sales tax collections as required under Amendment 1.
* Maine
During 1994, the state's budget will continue to be tested by the federal mandate that requires capping and closing several landfills that were built prior to new federal guidelines. To accomplish this, the state has put $5 million of general obligation bonds on the ballot.
Another proposal on the statewide ballot would allow the state to sell $39.5 million in bonds for infrastructure repairs to state highways, bridges, airports, cargo ports, and ferry services.
If approved, the state would receive matching federal monies for the projects.
Additionally, Maine voters will cast their ballots on a $15.2 million bond sale. Proceeds would be used to finance the construction of a water pollution control facility.
State voters will also address questions of protection of state park properties and whether the state's radioactive waste can be shipped to a site in Texas.
Lastly, a citizen petition has placed on the ballot the question of whether state legislators, the state Secretary of State, Attorney General, Auditor and Treasurer should be subject to term limitations. Maine's Treasurer, Samuel Shapiro, has held his post since 1980.
* Ohio
Ohio voters will decide whether to approve $200 million of new general obligation bonding authority for park and recreation improvements. If passed, state officials have said about $50 million of bonds would be issued annually with no more than $200 million of bonds outstanding at any time.
* Oregon
Oregon voters going to the polls in a special election on Nov. 9 will decide whether to approve the state's firstsales tax. The proposal for a 5% sales tax is contained in Measure 1.
The sales tax revenues would reduce strain on the state government caused by a school funding requirement under Measure 5, approved by voters in November 1990. Measure 5 lowers property tax rates and requires the state to replace revenues lost by elementary, high school, and community college districts. To meet state obligations under Measure 5, Oregon eventually will need additional revenues or face cutting state expenditures. Voter approval of Measure 1 will be an uphill battle; Oregon voters have defeated sales tax measures eight times since 1930.
* Washington
Initiative 601 would limit annual increases in general fund expenditures to the average rate of inflation plus population growth for the previous three years. The spending limit would take effect in fiscal 1996. Before July 1995, raising taxes would require voter approval. After July 1995, the state Legislature could raise taxes up to the spending limit with a two-thirds vote.
Initiative 602 would roll back an estimated $995 million in state tax and fee revenue increases approved during the 1993 session of the state Legislature. The loss of planned revenues would force the Legislature to rewrite the $16.1 billion 1993-95 biennial state budget.
Beginning in fiscal 1994, Initiative 602 would limit the imposition of any new taxes or fees, and the expenditure of state revenues. The limit would be based on a personal income formula. [TABULAR DATA OMITTED]
