Voters Approve at Least $12.2 Billion in Debt, Led by Texas

Texas residents passed a $6 billion bond measure to pay for water projects, the largest debt authorization before U.S. voters in elections yesterday, as 21 of the 25 biggest borrowings won approval.

At least $12.2 billion of state and local bonds were approved, or 93 percent of the 25 largest propositions, according to Ipreo Holdings LLC, a New York provider of capital-market data.

Texas residents also authorized $1.9 billion for student loans, according to results on the Secretary of State’s website. Voters in Arkansas passed a $575 million measure to pay for highway repairs. Philadelphia voters approved $111 million of bonds to upgrade public transport, roads, municipal buildings and parks, according to the City Commissioners’ website.

About $16.5 billion of debt went before electorates from Virginia to California, proposing financing for water supplies, roads and schools, two-thirds more than in 2009. Odd-year voters typically face fewer questions than in even-numbered years, when candidates for Congress are on the ballot. State agencies and municipalities sought $16.6 billion of bond issues in 2010, the smallest amount for a congressional-election year since 1996.

Needed Projects

“We do need to take on some of these projects,” Robert Ward, deputy director at the institute, said by telephone before voting results were in. With interest rates near record lows, public officials can make the argument that it’s a good time to borrow and projects can help local economies, Ward said.

Only four questions in the largest 25 failed, including for San Mateo Community College, in California, and three Texas borrowers: Montgomery County, Tyler Independent School District and Collin County water projects.

State and local governments have faced fiscal pressures as revenue trails projections while expenses climb following the longest recession since the 1930s. The Nelson A. Rockefeller Institute of Government in Albany, New York, said last month in a report that while state receipts rose for the sixth straight quarter through June, local property taxes declined for the third consecutive three-month period.

Tax-revenue growth in 20 states slowed to the lowest increase in more than a year in the third quarter, with a gain of about 7 percent compared with the same period in 2010, Alec Phillips, a Goldman Sachs Group Inc. analyst in Washington, said in a Nov. 7 report.

2007 Surge

In the two most-recent elections before stock markets tumbled to a 12-year low in March 2009, voters considered authorizing $28.7 billion of debt in 2007 and $67 billion in 2008. In the last odd-year election, just $9.8 billion went up for a vote in 2009, as the economy emerged from the recession, which curbed state and local government spending.

Municipal-debt sales may jump to $310 billion in 2012 from $270 billion this year as borrowers refinance, George Friedlander, senior municipal-bond strategist at Citigroup Inc., said at the Bloomberg State and Municipal Finance Conference in New York last week. The total may reach $350 billion, said Chris Mier, a managing director at Chicago’s Loop Capital Markets LLC.

Issuance will probably fall short of the $408 billion in 2010, when the federally subsidized Build America Bonds program boosted sales, data compiled by Bloomberg indicate.

Following is a list of the largest bond proposals before voters yesterday, according to the latest Ipreo and local elections data:

Issuer                                      Amount*

1. Texas, Water                             $6 billion     Pass
2. Texas, Student Loans                     $1.9 billion   Pass
3. Arkansas, Highways                       $575 million   Pass
4. San Mateo County Community College District,
   California                               $564 million   Fail
5. San Francisco Unified School District    $531 million   Pass
6. North East Independent School District,
   Texas                                    $399 million   Pass
7. Pasadena Independent School District,
   Texas                                    $270 million   Pass
8. Fairfax County, Virginia                 $253 million   Pass
9. Lamar Consolidated Independent School District,
   Texas                                    $249 million   Pass
10. San Francisco                           $248 million   Pass
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