Tuesday, November 4, 2008

Taxpayers to the rescue for local communities - No thanks

Americas state and local governments and municipalities are asking voters to approve record borrowing to fund schools, sewers and other public projects. The approval of $66 billion of public money is needed but most of it might get rejected. Taxpayers are not as receptive this year with a slumping economy and weakening job market. During the general election of 1990, a time when the economy was also slumping, only 41 percent of the taxpayer funded proposals were approved. We wrote about a similar situation in Denmark where community life is deeply impacted by a lack of funding due to the financial crisis. On both sides of the pond taxpayers will have to cover funding shortfalls and they won't like it a bit.

from Bloomberg:
California leads U.S. state and local governments asking voters to approve $66.4 billion in borrowing for schools, sewers and other public works today as a contracting economy and higher costs damp taxpayers' appetite for new debt.

Voters in 41 states from Rhode Island to Alaska are weighing the second-biggest slate of bond measures after November 2006's $78.6 billion, according to Ipreo, a New York-based financial data provider. California has the largest referendum, $9.95 billion in funding for a high-speed rail network, with proposals around the state totaling almost $42 billion.

Taxpayers, who approved an average 82 percent of bonds on local ballots the past decade, may not be as receptive this year. Wall Street upheaval drove interest rates on tax-exempt debt to record highs, hurt consumer spending, increased unemployment and prompted emergency federal government action to shore up the financial system.

``With voters tightening their own belts right now, I would think they would want government to do the same thing and not take on the new debt,'' said John Matsusaka, president of the University of Southern California's Initiative and Referendum Institute in Los Angeles.
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source: California, Schools Seek Approval for $66 Billion of Muni Bonds

source: A crisis' real world example in Denmark's small communities
Monday, November 3, 2008

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