Wisconsin State and Local Debt Situation Moderating?

State debt here totaled $13.7 billion in 2013, up 1.6% from 2012. Local debt fell 1.0% to $13.7 billion, its second consecutive year of decline. School, county, village, and town debt all fell last year.

Unlike the federal government, which borrows to pay for ongoing operations, state and local governments have traditionally borrowed to fund construction and other major projects.  Buildings, bridges, roads, sewers, and environmental cleanup are all expensive endeavors that state and local governments often cannot afford to fund at one time. Over the past 10 years, governments have also borrowed to pay for unfunded pension and health care liabilities of public employees.

Total state debt grew significantly between 2000 and 2013, increasing 173%, or an average of 8.0% per year.  By comparison, annual growth averaged 6.4% during the 10 years preceding (1990-2000).  General obligation debt more than doubled during 2000-13.  Revenue bonds rose 85%, and the state issued more than $3 billion in new appropriation bonds during these years.

Long-term state government debt in Wisconsin totaled $13.7 billion at the end of fiscal 2013. General obligation debt, which is backed by the full faith, credit, and taxing power of the issuing government, totaled $7.5 billion and accounted for 54.7% of the state total.  Revenue bonds, mostly for transportation, totaled $3.0 billion (21.6%).  Appropriation bonds ($3.3 billion, 23.8%) accounted for the remainder.

Although state debt has more than doubled since 2000, it grew more slowly in recent years.  While it increased at an average annual rate of 13.2% between 2000 and 2006, it grew just 3.8% annually between 2006 and 2013.  Total state debt rose 1.6% in 2012-13, compared to 7.2% in 2009-10.

Improvement at the local level is even more pronounced. Local debt climbed rapidly during the 1990s, an average of 10.0% per year.  In the 2000s, however, annual growth averaged only 3.1%.

Local general obligation debt totaled $13.7 billion in 2013, down from $13.5 billion in 2012.  Of that, K-12 schools accounted for roughly $4.3 billion, down from $4.4 billion in 2012.  This continues a general pattern of decline that has been occurring since 2004.  After increasing 25.9% in 2009 and 7.3% in 2010, county debt fell 1.7% in calendar 2011 and another 5.1% to $2.3 billion in 2012.

Unlike other forms of local debt, technical college debt has accelerated recently. Between 2006 and 2013, annual growth averaged 8.1% and debt increased 21.7% between 2012 and 2013.

The most surprising change locally has been the recent decline in municipal debt. Over the past 25 years, municipal debt grew faster than most other forms of local debt. While total local debt increases averaged 2.7% per year between calendar 1999 and 2012, municipal debt growth averaged 4.2%. However, municipal debt dropped in 2012, the first drop since at least 1989.

When state and local obligations are combined, Wisconsin has $27.4 billion of debt, roughly $4,782 for each of its 5.7 million residents.  If local revenue bonds are added, the total rises to nearly $32 billion.  This debt is not trivial; however, compared to the U.S. ($53,261 per capita in 2013), Badger state debt is modest.

A free copy of The Wisconsin Taxpayer magazine, “A Closer Look At Public Debt: With Federal Debt Rising, How is Wisconsin Doing?”  is available by visiting www.wistax.org; emailingwistax@wistax.org; calling 608.241.9789; or writing WISTAX at 401 North Lawn Ave., Madison, WI 53704-5033. o

NOTE: This press release was submitted to Urban Milwaukee and was not written by an Urban Milwaukee writer. It has not been verified for its accuracy or completeness.