Moody's Investors Service, in what it terms an "initial response" to the tax limitation initiatives that will be on Utah's general election ballot in November, says passage of the initiatives would have "negative credit consequences" for those who bought bonds issued by the state and its municipalities.

Moody's statement follows a similar announcement last month when Standard and Poors, the other national bond rating agency, placed Utah's triple-A rated general obligation bonds on its S&P CreditWatch with "negative implications." Again, the reason cited was the possibility of the tax initiatives being passed in the general election.Moody's said passage of tax-reduction measures in Colorado also would have negative implications for bond holders.

The "People's Tax Reduction Act" and the "People's Tax and Spending Limitation Amendments" in Utah and the "Taxpayer's Bill of Rights" in Colorado," said Moody's, "are designed to limit government revenue growth generally through specific formulas on rates with voter approval required to exceed the specified limits."

Moody's said passage of the amendments can be expected to result in immediate budget cutbacks for most units of government and reduce the future revenue-raising flexibility of all units of government in the states.

"As a result, passage of the ballot initiatives will weaken the credit-worthiness of many issuers and will result in Moody's review of municipal ratings throughout the two states."

Mike Leavitt, a member of the executive committee of Taxpayers for Utah, the group formed to oppose the tax initiatives, said Moody's action is yet another indication, from independent sources, that the tax initiatives go too far.

"These are radical proposals that respond to emotions and not logic and will do serious damage to our state's ability to attract and support economic development," said Leavitt.

Greg Beesley, chairman of the Utah Tax Limitation Coalition, the group pushing for passage of the initiatives, questioned _ as he did earlier with Standard and Poor's action _ whether tax limitation would make the state a credit risk.

"When the governor took an entourage back to Washington last June, he came back with a report that bonds wouldn't be hurt, so there are two sides to the coin," said Beesley.

"These tax initiatives are going to hold down the amount of bonding going on in the state . . . all bonds will have to be approved in general elections, and that will make them tougher to get by. So (fewer bonds) will pass, and there will be less bonded indebtedness on our property, and I can't see why that would affect our bond rating in a negative manner."

Beesley said it doesn't make sense that less indebtedness would mean a lower credit rating. "If I'm in debt up to my eyeballs personally, and I go for another loan, they tell me no, I have no equity." The same should apply to the state, he said.

Moody's currently maintains 71 Utah ratings on tax-supported bonds and lease obligations representing 67 localities and the state.