DALLAS -- Missouri voters on Tuesday overwhelmingly defeated a constitutional amendment to limit state taxes and spending, freeing up bond issues that had been put on hold and relieving fears that the state's public finance industry would suffer cuts.
In a vote that exceeded a 2-to-1 ratio, state residents failed to approve Amendment 7, also called the Hancock II amendment. The measure would have expanded the types of state fees and taxes included under the original tax and spending limitation measure approved in 1980.
"They were trying to recategorize the taxes, and that would have created a crisis in the state," said James Moody, a former Missouri budget director who analyzed the tax and revenue proposal for the measure's opponents. "There is relief among issuers and bankers."
Many financial industry and government officials had predicted that approval of the amendment would have dried up bond issues in Missouri for one to two years and resulted in more than $1 billion in state budget cuts, effectively limiting new projects.
Even before the election, state government officials had put several bond issues on hold, including $250 million debt sale for prisons and higher education facilities. State officials said they will now move forward with that bond issue, which was approved by voters in August.
Meantime, Spencer Burke, head of public finance for Edward D. Jones in St. Louis, said other bond transactions are now moving ahead as planned for first time in the past two months.
Burke said deals that will go forward in the next several weeks include a $100 million bond sale for the Missouri Housing Authority, a $20 million bond sale for a psychiatric hospital facility, and a $45 million sale for a sewer and water project through a state revolving fund.
In addition, some local government issuers had delayed bond sales because of legal concerns that could have been provoked by Hancock II, further aggravating a slow bond market.
"We are now moving back to the normally crummy municipal bond market as opposed to the catastrophically crummy market," Burke quipped.
Opponents of the measure had feared that massive state cuts would be needed if the amendment were passed, including firing 9,000 teachers, shutting down three of the state's 12 prisons and reducing the state highway funds budget by $140 million. In addition, bond firms had feared they would have to lay off staff because of the reduction in business.
Proponents sought to put a cap on tax increases and close loopholes in the original Hancock Amendment, which specifies that Missouri taxes cannot amount to more than 5.6% of the total income of state residents.
U.S. Rep. Mel Hancock, R-Springfield, the measure's major advocate, could not be reached for a comment by yesterday's deadline, but he has said the government has made misleading statements about the amendment.
"There are a bunch of people doing a lot of lying," Hancock said last week.
Although the Hancock II amendment was defeated, Missouri voters approved a constitutional amendment to allow slot machines on riverboat casinos. The measure has been defeated by state voters three times in the last few years.
Slot machines could be put on Missouri's riverboat casinos as early as next month, officials said.
Those voting for the gambling measure, or Amendment 6, accounted for almost 54% or 942,837 votes; those opposing it numbered about 46% or 807,128.
The vote for Amendment 7, or Hartcock II, was 1,194,419, or about 68%, against and 558,190, or almost 32%, in favor.