While federal debt continues to climb, Wisconsin’s state-local debt load is showing some signs of stabilizing. A new report from Wisconsin Taxpayers Alliance, “A Closer Look At Public Debt: With Federal Debt Rising, How is Wisconsin Doing?” shows combined state-local debt grew 0.3 percent in 2012-13, its smallest increase since 2008.

State debt here totaled $13.7 billion in 2013, up 1.6 percent from 2012. Local debt fell 1 percent 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 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 percent - an average of 8 percent per year. By comparison, annual growth averaged 6.4 percent during the 10 years preceding (1990-2000). General obligation debt more than doubled during 2000-13. Revenue bonds rose 85 percent, 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 percent of the state total. Revenue bonds, mostly for transportation, totaled $3 billion (21.6 percent). Appropriation bonds ($3.3 billion, 23.8 percent) 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 percent between 2000 and 2006, it grew just 3.8 percent annually between 2006 and 2013. Total state debt rose 1.6 percent in 2012-13, compared to 7.2 percent in 2009-10.

Improvement at the local level is even more pronounced. Local debt climbed rapidly during the 1990s, an average of 10 percent per year. In the 2000s, however, annual growth averaged only 3.1 percent.

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 percent in 2009 and 7.3 percent in 2010, county debt fell 1.7 percent in calendar 2011 and another 5.1 percent 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 percent and debt increased 21.7 percent 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 percent per year between calendar 1999 and 2012, municipal debt growth averaged 4.2 percent. 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. That compares to a U.S. debt load of $53,261 per capita in 2013.

A free copy of The Wisconsin Taxpayer magazine, “A Closer Look At Public Debt: With Federal Debt Rising, How is Wisconsin Doing?” is available at www.wistax.org or contact wistax@wistax.org or 608-241-9789.