Nov. 4 (Bloomberg) -- Voters approved 22 of the 30 biggest plans for new state and local borrowing on ballots yesterday, clearing the way for a new hospital in Indianapolis, school upgrades in Detroit and open-space preservation in New Jersey.

Local governments in 24 states sought permission to issue $7.8 billion in new debt, the least in 14 years, according to Ipreo LLC, a New York-based financial software firm. Of $7.7 billion in measures for which results were available, 72 percent passed, Ipreo figures show.

Officials scaled back bond plans from a record $78.6 billion in 2006 as the worst recession since the Great Depression slashed tax collections and direct stimulus aid substituted for borrowing. Voters on Election Day approved more bonds than they rejected for the 19th consecutive time.

“Voters seem to be receptive to bond measures even in years when the economy is not so great,” said Jennie Drage Bowser, an election analyst in Denver for the National Conference of State Legislatures.

State tax receipts tumbled by a record 17 percent in the second quarter, according to the Nelson A. Rockefeller Institute of Government in Albany, New York. Governments have been cutting spending to make up for the drop.

“States are just being fiscally conservative like you and me,” Bowser said. “The federal stimulus money helped relieve the need to go out and get voter approval. Stimulus money is paying for a lot of infrastructure for the states right now.”

42-Year Low

Benchmark municipal borrowing costs reached a 42-year low last month before rebounding. The weekly Bond Buyer 20 Index dropped to 3.94 percent on Oct. 1 as cash flowing into mutual funds accelerated to a record. The index has since risen to 4.39 percent, still below the five-year average of 4.54 percent.

This year’s number of bond proposals was low, even for an odd-numbered election year when voters don’t cast ballots for president or most congressional seats. The previous low was $7.27 billion in 1995, when 84.5 percent passed.

State and local officials submitted at least $10 billion to voters each November from 1996 through 2008, and the average approval rate during the previous 20 years was 75 percent, based on Ipreo data. The latest rate is the lowest since 2003, when 60.8 percent were approved.

Voters in Indiana’s Marion County, the home of the state capital and largest city, Indianapolis, approved borrowing $704 million for a medical center to replace county-owned Wishard Memorial, where some buildings are almost a century old.

Subsidized Borrowing

A plan to raise $500.5 million to build eight schools and upgrade 10 others passed in Detroit, the largest U.S. city with a credit rating below investment grade. The school system wants to sell debt under two federal stimulus initiatives: Build America Bonds and the Qualified School Construction bond program, according to district documents.

Under the Build America Bonds program, 35 percent of the taxable interest cost is paid by the U.S. Treasury. Qualified school debt compensates investors with federal tax credits and gives localities zero or low interest-rate loans.

“In a city where we don’t have a $500 million capital project on the drawing board, I think this is good,” Robert Bobb, Detroit Public Schools’ emergency financial manager, told Michigan Public Media.

New Jersey voters approved a measure to sell $400 million of state-backed bonds to fund conservation of open spaces in the most densely populated state. The ballot question asked to give the state authority to sell general obligation bonds and use the proceeds to create parks and preserve farms and historic sites from urban sprawl.

Fairfax County

Voters in Fairfax County, Virginia, which carries the highest bond ratings of the three main credit-rating firms, approved a $232.6 million debt sale to finance expansion and renovation of schools in the suburbs of Washington.

The work is needed at the 12th-largest U.S. school system because enrollments have pushed some buildings beyond capacity and will continue to grow for the next five years, according to the district’s Web site.

In Utah, voters in the Granite School District, the second- largest in the state, approved a ballot measure to sell $256 million of bonds for school construction. The Davis School District, the third-largest in Utah, won permission to issue $250 million of debt.

Ohio voters passed a constitutional amendment authorizing the state to sell $200 million of debt to pay bonuses to veterans and families of war dead. Under the plan, the Ohio Department of Veterans Services will pay as much as $1,000 a month to Ohio residents who served in the military during the wars in the Persian Gulf, Afghanistan and Iraq.

Defeats

Borrowing plans totaling $350.9 million from the Arizona city of Surprise and from Texas’s Brazosport Independent School District didn’t pass, according to results from Web sites of the Maricopa County Recorder’s Office and Brazoria County Clerk.

The Texas Veterans Land Board, which provides housing loans, won voter assent to make permanent its ability to issue debt up to a limit of $4 billion. The board previously had to seek voter approval every time it wanted to raise capital after previous bonds were retired. The reauthorization isn’t included in the $7.8 billion.

“Even in tough economic times, communities need to invest in schools and roads and other improvements to lay the groundwork for a strong recovery,” Nicholas Johnson, director of the State Fiscal Project at the Center on Budget and Policy Priorities in Washington, said in an e-mail. “With interest rates low, it’s a smart time to be issuing bonds.”

To contact the reporters on this story: Jeremy R. Cooke in New York at jcooke8@bloomberg.net; Michael B. Marois in Sacramento at mmarois@bloomberg.net; Michael McDonald in Boston at mmcdonald10@bloomberg.net.

Last Updated: November 4, 2009 14:19 EST