DALLAS -- Missouri voters will decide next week whether to make it easier for cities, counties, and schools to raise property taxes with a constitutional amendment that officials and bond dealers say is needed but unlikely to pass.
In the election next Tuesday, voters will also decide on an amendment that would allow a state highway commission to issue revenue bonds, and another that would give constitutional backing to a fledging rainy-day fund for the state.
Voters will be asked to amend the state constitution so that local governments will need only 57% support rather than the two-thirds approval now required to increase property taxes. The lower requirement would be in effect only for balloting held on regularly scheduled election days, not for specially called votes.
Even though voters have already lowered approval requirements by the same level on local bond issues, some officials are not giving the newest proposal much chance of passing.
"I think it will go down the tubes," said Vic Slaughter, director of finance for the Missouri Department of Elementary and Secondary Education. "Even if it passes, I don't think it's going to make very much of a difference."
Slaughter's point is that the school districts that now need two-thirds' approval for bond issues generally already get it. But many other districts struggling to raise needed revenues do not get anywhere near the voter support they need.
Bond dealers say the measure could benefit schools the most because they most often operate near the limit for the operations tax levy. Under Missouri law, a district needs only a simple majority to raise taxes as long as its combined rate does not exceed $3.75 per $100 of assessed valuation.
However, if taxes exceed that level, approval by two-thirds of all votes is necessary to raise taxes. The proposed amendment would lower that requirement to 57%.
Slaughter said that 129 of the state's 538 schools are already above the cap, while 60 others are within 25 cents of the maximum.
"Right now, I think there's a number of districts that don't even ask because they know they can't get the vote that's required," he said.
Bond dealers said the measure may be doomed because there is no active campaign in support of it. They note that the amendment is phrased in legalese that may frustrate some voters and that voters are generally lukewarm to anything that could mean a higher tax bill.
"I don't think the average person can decipher what these proposals really mean. I have an MBA, and I has a hard time understanding it," said one underwriter. "Voters may apply the old rule that when in doubt, just say no."
One measure that many in the bond community are watching is the proposal to broaden the role of the Missouri Highway and Transportation Commission from policy-making to a more active part in planning and financing projects.
The measure would give the commission the power to study projects and finance them with revenue bonds paid only from project funds.
Missouri Commissioner of Administration James Moody said the proposal was designed to help develop a toll road from Kansas City to Chicago by using bond financing and other moneys. But he said it is questionable whether the measure as worded is enough to empower the commission to fund toll paid projects.
Besides, he said, the constitutional amendment would not allow the commission to back its bonds with anything other than project revenues. Since the agency would be new, Moody said such start-up financing might not be acceptable to the market.
Others see the measure as the first step toward creating a state-level bond issuing agency that could help plan and finance toll projects in areas of the state where such transportation systems are needed. Missouri currently does not have any outstanding debt for highways.
Robert Kurtter, assistant vice president at Moody's Investors Service, and the creation of such a turnpike authority would not be unique to Missouri, whose $875 million in highway funding this year will come solely from cash available in the state budget.
"With the winding down of the federal highway program, we have seen more states going this way," he said.
Because the new federal highway legislation allows federal money to be used in some toll projects, many states are looking at combining the two revenue streams to build transportation projects.
"This was one of several financing methods that we have discussed that could be used," said Bob Maher, the commission's lobbyist. "We don't have enough gas tax revenue to build all the highways we think are needed."
A final measure on the ballot would create the Budget Stabilization Fund, a rainy-day fund that could be tapped with a four-sevenths vote of the Missouri House and Senate to meet shortfalls.
"They are essentially putting into the constitution what they already practice under statute," Kurtter said.
In 1985, lawmakers created a statutory rainy-day fund in which it would deposit surpluses to use in hard times. But the state has only twice deposited money in the fund, which currently has nearly $20 million available for emergencies.
Moody said the proposal would change little. "It would give the General Assembly a little more control over when the fund would be expended," he said. "The important thing is that we need to get the fund funded because $20 million is not adequate."
Ultimately, he said, the fund could hold an amount equal to 3% to 5% of the annual budget, or about $136 million to $226 million.
Moody said the constitutional amendment would not mandate savings, adding, "It would still be a discretionary appropriation."
What would it mean to the state's rating? Very little, Kurtter said, since the state already carries triple-A ratings from Moody's Investors Service, Standard & Poor's Corp., and Fitch Investors Service Inc.