Ballots for Borrowing

There was a lot of money riding on last week's elections. In the second largest borrowing referendum in history, voters in 23 states had to decide on proposed bond issues to raise more than $2.9 billion for new roads, airport terminals, schools, parks, subways, sea walls, water and sewer mains and urban renewal. Their decision: overwhelming approval of well over two-thirds of the bond issues, ranging from $1,500,000 for new firehouses in Omaha to $790 million for schools and parks in California. For the U.S. economy, the $2.2 billion in new state and local borrowing thus voted means an added stimulus that will spread through many indus tries and areas.

The U.S. construction industry stands to be the biggest beneficiary of the windfall, though the actual spending will be sufficiently spread out so that no sudden spurt in jobs or contracts is likely. But thousands of other businesses are already getting a boost from local and state expenditures, which are climbing fast and have now passed the $80 billion-a-year mark. While federal tax revenues have risen 42% to $89.4 bil lion a year since 1953, state and local revenues have spiraled 134% to $49 billion-frequently distressing both the individuals and the corporations who have to pay the tab.

Under such pressure, state legislatures are becoming somewhat reluctant to enact new tax laws, instead are turning more and mo're to the bond market; states, counties and cities are now raising about $10 billion a year through tax-exempt bonds. With the supply of investable money at an alltime high, the market has no trouble filling this demand among commercial banks and in surance companies. And the nation's voters, however much they dislike debt and taxes, are usually willing to go along with bond issues to get what they want for their communities -expecially since that way, the day of reckoning can be postponed.

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