Investing November 5, 2009, 8:22PM EST

Referendums 2009: Gains for Government Spending, Gambling

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Based on these projections, we do not anticipate that the new revenues, should they materialize, will significantly change local government revenue structures but they could make budgeting easier in some cases, in our opinion.

Texas (AA+; stable)
Texas voters approved all 11 measures, including two on bond issuance, two on the collection of ad valorem taxes on real property, and one related to higher education. We do not believe that any of the measures have significant credit implications.

Measures affecting bonding at the state and local levels included:

• Proposition 1, which allows a local government to issue bonds to acquire land that is adjacent to military bases. Cities or counties could sell bonds or use tax increment financing to pay for the land acquisition of buffer areas near or open spaces adjacent to military installations.

• Proposition 6 authorizes the Veterans' Land Board to issue general obligation bonds to sell land or mortgages to residents who are military veterans.

Affecting the property tax system were:

• Proposition 2, which allows the legislature to require that a residence homestead be taxed based on its current use rather than on the market value associated with its potential for redevelopment. We understand that the measure could, over time, result in lower taxable property values in some cases, with implications for local property tax revenues for municipalities, school districts, and counties. The state may also need to increase equalization funding to school districts in cases where property valuations decline.

• Proposition 3, which allows the state to assume enforcement authority and oversight over local appraisals from counties to attain uniformity and equity of appraisal processes throughout the state.

Texas voters also backed measures relating to funding of national research universities and veterans' hospitals. Proposition 4 transfers the balance of an already established higher-education fund to create a new long-term source of research grants for seven second-tier state universities, while Proposition 8 allows the state to establish, maintain, and operate veterans' hospitals.

Washington (AA+; stable)
Voters turned down Initiative 1033, which would have limited growth of certain state, county, and city revenues to annual inflation and population growth rates, unless overridden by public vote. The state and local government would have rebated any revenues collected above the formula to property-tax payers. We believe that the measure would have significantly slowed revenue growth at the state and local level as the state emerged from the recession.