Ballots put pressure on US state ratings State and local government credit ratings could come under pressure, depending on the outcome of scores of ballot measures up for a vote in Tuesday's US elections. Rating agencies are warning that many of the measures threaten to limit the financial flexibility of governments and impair their ability to withstand a future economic downturn. Fitch Ratings says Michigan, Florida, Oklahoma, Oregon and several other states are polling voters on measures that would make it harder for officials to raise taxes or cut the pay, pensions and benefits of government workers. Meanwhile, in California, duelling ballot measures could solidify fiscal improvements made under Governor Jerry Brown or lead to downgrades of numerous school districts, depending on the way the votes fall on Tuesday. While the 174 ballot measures in 37 states are diverse, repeated themes include attempts to limit the freedom of politicians to improve local finances through tax rises and limits on collective bargaining by government employees, says Douglas Offerman, a state credit analyst at Fitch. "Obviously taxes are an issue of high sensitivity among voters at a time when the economy is recovering only slowly," he said, but tax-raising freedom is a key element of governments" creditworthiness. Part of the reason that states have strong credit ratings is that they have such flexibility, so it's something we are attuned to as credit analysts and whether that flexibility is being changed by voters. One of the most keenly watched ballot measures is Mr Brown's "Proposition 30" in California, which seeks to raise $8.5bn in the coming year through tax increases on people earning more than $250,000 a year and through a rise in sales taxes. An alternative measure, Proposition 38, would raise more revenue but earmark most of it for education instead of making it available for general purposes, such as backing California's outstanding general obligation bonds. Neither proposition had the support of more than 50 per cent of California's voters in recent polls. The failure of Proposition 30 would trigger automatic spending cuts to schools, to make up for the lost tax revenue. Moody's says 150 of the state's 327 school districts would face ratings pressure because of the resulting pressure on budgets and the weakest would probably be downgraded. No rating agency threatened outright downgrades for state credit ratings as a result of individual ballot measures, though some state polls could have negative implications for creditworthiness. In Michigan, one measure would enshrine government workers" right to collective bargaining in the state constitution, with implications for state and local level credit ratings. In Oklahoma, there are proposals to lower the cap on annual increases in property valuations and to disallow the assessment of intangible property for taxes. In Florida, two proposed constitutional amendments would constrain income through more restrictive revenue limitations for the state and caps on annual assessed value increases on property for local government taxes, Fitch said.