-Bond Measures In 7 States Would Allow Combined $3.2B New Debt Issuance

By Yali N’Diaye

WASHINGTON (MNI) – As the elections in the U.S. fast approach, voters will
not only be asked to choose the nation’s president, but will also vote on
various propositions on ballots across the country, with taxes being the key one
from a credit standpoint, Standard & Poor’s said Thursday.

And on that front, the most significant proposals will be in
California, the rating agency said in a report titled ‘Fiscal
Propositions Abound In The Election.’

While the agency will monitor the impact of ballot measures “over
time” as well as the response from the local governments, it does not
expect any short-term effect on the latter’s creditworthiness.

“Due to a phasing-in of their effects or narrow changes to existing
frameworks, Standard & Poor’s Ratings Services believes that this year’s
measures are unlikely to immediately affect state or local government
credit quality,” wrote the authors — led by Primary Credit Analyst Chris

For instance, in light of weak economic growth that is putting
pressure on local government revenues, several states are calling for
higher taxes or changes in their tax frameworks, Standard & Poor’s said.

“The common credit-related topics this year are bond issuance,
taxes and spending, education, and gambling,” the report added. “Bond
measures in seven states (Alaska, Arkansas, Maine, New Jersey, New
Mexico, Oklahoma, and Rhode Island), if passed, would allow these states
to issue roughly a combined $3.2 billion in new debt.”

Overall, however, “We do not anticipate that any ballot measure
will have an immediate effect on our credit opinions,” said Standard &

In a September 19 Ballotwatch report, the Initiative & Referendum
Institute said 174 ballot propositions will be submitted to voters
across 37 states, with topics as diverse as marijuana, health care,
same-sex marriage, public employee unions, gambling and the one Standard
& Poor’s focuses on for credit assessment purposes: taxes.

“The 174 propositions in November are up from 159 in 2010, and the
153 in 2008, and the highest total since 204 measures appeared in
November 2006,” the Institute said.

** MNI Washington Bureau: 202-371-2121 **

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–email: yndiaye@mni-news.com