US Voters to Decide $76 Billion of Bonds, Taxation Limits

November 1, 2018 Updated: November 1, 2018

CHICAGO—Election ballots around the United States on Nov. 5 will be packed with referendums for billions of dollars of state, local government, and school bonds, as well as measures seeking to curb taxation, expand health care for the poor and increase school funding.

There are 673 bond issues on ballots in 38 states totaling nearly $76.3 billion, the biggest amount for a November general election since 2006, according to near-final data from Ipreo by IHS Markit.

The biggest concentration of bonds, $34.9 billion split between 126 measures, will appear on ballots in California, by far the largest U.S. state in population. Voters in the Golden State will consider nearly $16.4 billion of bonds—in four state-wide referendums—to fund water projects, housing, and children’s hospitals.

People cast their ballots
People cast their ballots for the 2016 general elections at a crowded polling station as early voting begins in Carrboro, N.C., U.S., Oct. 20, 2016. (Reuters/Jonathan Drake)

Tax Policy Changes

In addition, Californians will vote on repealing a 2017 hike in gasoline taxes and vehicle fees aimed at raising $5.1 billion a year for transportation projects. The measure would also require voter approval to impose future transportation-related tax and fee increases.

Ballots in other states also include questions aimed at reining in taxes.

“Voters often like the idea of enacting limits on their government’s ability to raise revenues, but from our perspective those kinds of constraints reduce financial flexibility and can certainly create problems for state governments,” Ted Hampton, an analyst at Moody’s Investors Service, said in an interview on Nov. 1.

Florida’s legislature put a proposed constitutional amendment on the ballot mandating a two-thirds vote by each legislative chamber to pass new or increased taxes or fees.

“If approved, a higher legislative hurdle to approve increases to existing revenue and taxes would slightly weaken our view of revenue structure flexibility in the state’s fiscal policy framework,” S&P Global Ratings said in a July report.

In Oregon, a constitutional amendment on the ballot would extend an existing three-fifths legislative vote for tax increases to include revenue raised by fees or through changes to or the elimination of tax breaks.

In North Carolina, where the personal income tax rate is 5.499 percent, the legislature put a proposed constitutional amendment on the ballot that would lower the maximum tax rate to 7 percent from 10 percent. A proposed constitutional amendment in Indiana would mandate balanced state budgets unless a two-thirds majority vote by the legislature suspends the requirement.

The taxation of groceries is the focus of ballot measures in two states. Oregon voters will vote on a constitutional amendment prohibiting the state and local governments from imposing a tax or fee on the sale or distribution of eatable or drinkable groceries.

In Washington state, a campaign in support of a ballot initiative to ban new or increased local government taxation of food and beverages bought in stores has been largely funded by soft-drink makers, including Coca-Cola Co. and PepsiCo Inc. If approved, Seattle’s existing tax on sweetened beverages would remain in place.

Health, Transportation, and Education

Voters in three states—Idaho, Nebraska, and Utah—will be asked to expand Medicaid, the state and federal healthcare program for low-income residents.

Colorado voters will choose between two competing measures to fund transportation. One measure seeks to increase the state sales tax rate to 3.52 percent from 2.9 percent for 20 years to back $6 billion of bonds. Another authorizes $3.5 billion of bonds without specifying a revenue source.

There are several state-wide measures to boost education funding. Colorado would hike its corporate income tax rate and individual rates for residents earning over $150,000 to generate $1.6 billion a year for primary and secondary schools under a proposed constitutional amendment.

Maryland voters will decide whether to allocate an increasing amount of gambling revenue every year to public education starting in fiscal 2020. Michigan’s K-12 schools would receive a portion of revenue from a tax on marijuana sales if voters agree to legalize recreational use of the drug.

A Hawaii measure would impose a surcharge on residential investment property for schools, while South Dakota voters will vote on increasing a tobacco products excise tax to raise money for the state’s four technical institutes.

US election booths
A man walks to use a voting booth March 1, 2016, at one of the Virginia primary election polling stations at Colin Powell Elementary School, in Centreville, Va.
(Paul J. Richards/AFP/Getty Images)

By Karen Pierog