ATLANTA - Louisiana voters Tuesday trounced a constitutional amendment to limit state borrowing and spending.
The proposed amendment, which was hammered out in a state constitutional convention this summer, called for a gradual reduction in the amount of general obligation bonds the state could issue in any year to 70% of bonds retired that year. The amendment also would have required the Legislature to adopt a comprehensive debt management plan to take effect no later than Dec. 31, 1993.
In addition, the amendment would have let state spending increase only by the amount that personal income expanded; restricted the use of non-recurring revenues; required feasibility studies for capital projects; and given lawmakers the power to slash up to 10% of the state's budget to avoid a deficit.
Finally, the measure called for several provisions aimed to help local governments. Localities would have been allowed to levy an occupational license tax if authorized to do so by the state Legislature, and legislators would have been required to pass by two-thirds vote any exemption from local sales or use taxes.
Municipal market sources said yesterday that despite support from Gov. Edwin Edwards, the amendment was defeated because of strong opposition from the Louisiana School Boards Association, which was convinced the provision allowing budget cuts would lead to a raid on the state's Minimum Foundation Program. That $1.77 billion program, which is currently under constitutional protection, disburses state money to local school boards.
"With Louisiana's budget problems, the association was convinced that the amendment would gut the program, so they fought it tooth and nail," said one investment banker, who declined to be identified.
The defeat of the amendment by a 63% margin represented a setback for Gov. Edwards, who had made constitutional reform of the state's finances a campaign priority before he was elected in October 1991. Originally, Edwards had sought during the constitutional convention to put before voters an amendment that would have included raising the state's income tax and reducing its homestead property tax exemption.
The rejection also marked the second time in four years that voters have decided against amending the state's constitution to provide fiscal reform. In April 1989, proposals backed by then-Gov. Buddy Roemer were turned down that would have shifted the burden of taxation from corporations to individuals, broadened the sales tax base, and lowered the homestead exemption.
In a press conference yesterday, Edwards expressed his disappointment with Tuesday's vote on the amendment.
"It reflected a general distrust of state government," he said. But he also noted that voters were skeptical about the amendment because it did not go far enough.
"People were looking for something more meaningful," Edwards said.
Louisiana voters also rejected on Tuesday six other constitutional amendments, three of which would have affected state finances.
One amendment would have lifted the state's prohibition on buying corporate stock for the state's $700 million Education Quality Trust Fund. State Treasurer Mary Landrieu, who manages the fund, had pushed for the change arguing that it would allow her to diversify the trust fund's portfolio.
Another defeated amendment would have loosened restrictions on the use of public funds for private programs, permitting some economic development programs that are currently prohibited. The third constitutional amendment with fiscal implications would have dedicated the first $5 million of net lottery proceeds to the Louisiana Health Insurance Association Fund.