K-12 Tax & Spending Climate: Wisconsin State and Local Debt Rose Faster Than Federal Debt During 1990-2009 Average Annual Increase in State Debt, 7.8%; Local Debt, 7.3%

WISTAX:

State and local debt in Wisconsin grew faster than federal debt over the last 19 years. State debt rose 316%, an average of 7.8% per year, from $2.71 billion in 1990 to $11.25 billion in 2009. Local general obligation debt was up 284%, a 7.3% average, from $3.41 billion in 1989 to $13.1 billion in 2008. Federal debt held by the public averaged annual increases of 6.2% per year for a total increase of 212.8% from 1990 through 2009. The figures come from a new study from the Wisconsin Taxpayers Alliance (WISTAX), a nonprofit, nonpartisan public policy research organization dedicated to citizen education.

Governments borrow for many reasons, including buildings, roads, sewers, and environmental cleanup. However, WISTAX researchers found that about 40% of the state increase was due to $1.6 billion of tobacco bonds issued in fiscal 2002 that were funded by a stream of payments from tobacco companies, as well as $1.8 billion in appropriation bonds issued in fiscal 2004 to pay unfunded state pension and sick-leave liabilities. The tobacco bonds were issued to help balance the 2001-03 state budget. The bonds were refinanced in fiscal 2009, generating an additional $300 million that was used to balance the 2008-09 general fund. Originally expected to be paid off in 2018, the refinanced bonds will not be paid off until 2029.

Posted by Jim Zellmer at July 6, 2010 2:03 AM
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