http://www.jsonline.com/story/index.aspx?id=689757
This is not good, not good at all:
Madison - To pay for highways, buildings and environmental programs, state government slid 87% deeper in long-term debt over the past 10 years. That decade spans the leadership of Democratic Gov. Jim Doyle and Republicans Scott McCallum and Tommy G. Thompson.
According to the Legislative Fiscal Bureau, the state had $8.28 billion in general-obligation, transportation and environmental debt in mid-2006; the same debts totaled $4.41 billion in 1996. The 87% increase was three times the U.S. inflation rate over that period. Figures show that debt rose the most - by $1.8 billion- under Thompson between 1996 and 2001, when he resigned to become a cabinet secretary for President Bush. Debt increased by more than $1.5 billion in Doyle's first three years. Todd Berry, president of the Wisconsin Taxpayers Alliance, said the growing debt is another risky budget decision governors and legislators have made to benefit themselves politically. Also rising is annual debt-service payments on those bonds: Principal and interest payments on general-obligation bonds will exceed $700 million for the first time this year; and payments on transportation bonds will cost an additional $174 million.
That $874 million is cash that can't be used for other important programs. By comparison, that amount is close to what it cost to run the state's prison system last year.
Officials say there are several reasons for the soaring debt:
According to the Legislative Fiscal Bureau, the state had $8.28 billion in general-obligation, transportation and environmental debt in mid-2006; the same debts totaled $4.41 billion in 1996. The 87% increase was three times the U.S. inflation rate over that period. Figures show that debt rose the most - by $1.8 billion- under Thompson between 1996 and 2001, when he resigned to become a cabinet secretary for President Bush. Debt increased by more than $1.5 billion in Doyle's first three years. Todd Berry, president of the Wisconsin Taxpayers Alliance, said the growing debt is another risky budget decision governors and legislators have made to benefit themselves politically. Also rising is annual debt-service payments on those bonds: Principal and interest payments on general-obligation bonds will exceed $700 million for the first time this year; and payments on transportation bonds will cost an additional $174 million.
That $874 million is cash that can't be used for other important programs. By comparison, that amount is close to what it cost to run the state's prison system last year.
Officials say there are several reasons for the soaring debt:
• Hemmed in by past no-tax-increase promises, legislators and governors have instead OK'd record borrowing to have the best of both election-year worlds - continued spending for popular programs while pushing paying for those programs off into the future.
• The need to maintain spending on highway repair and construction projects such as the new Marquette Interchange in downtown Milwaukee. Investments in transportation projects translate into economic development, said state Budget Director Dave Schmiedicke. But bonding for transportation has soared over the past two years. When Doyle finished rewriting the Legislature's budget with vetoes two years ago, it authorized $716 million in new transportation bonds. Transportation bonding dropped to $540 million in the budget passed last month, but only because several fees paid by drivers and truckers were raised.
• New construction on University of Wisconsin System campuses - projects paid for with student fees and general tax dollars. The most expensive UW System project authorized in the new state budget is the $87.7 million replacement of Union South on the UW-Madison campus.
• Environmental protection and cleanup programs. The Warren Knowles-Gaylord Nelson Stewardship Program, which buys pristine recreational land to keep it from being developed, started in the 1990s and will require an additional $86 million a year in debt starting in 2011.
Supporters of the stewardship program say its costs have grown because the value of those recreational lands has increased, in part because of development pressures.
Doyle aides say the state's debt remains manageable. "Total outstanding debt will continue to grow in absolute dollars, but should not grow faster than the economy or the budget," said Capital Finance Director Frank Hoadley. About 4% of all general-fund spending this year will go to pay off state debt, which is reasonable, Schmiedicke said. "While the (debt) total is going up, its share of the budget is remaining relatively constant," he said. Schmiedicke said incurring more debt allowed Doyle and legislators to protect public schools, aid to local governments and the transportation infrastructure. It also freed up state aid to control increases in property tax bills, he added. Greater debt was a reasonable trade-off, Schmiedicke said. But a major bond agency, Standard & Poor's Ratings Services, last week frowned at the state's finances - including the growing debt load and an emergency fund of less than 1%. The agency changed its rating outlook from "positive" to "stable," but did not downgrade its ratings for specific bond issues.
Berry said state government's worsening debt load is irresponsible and risky. That amount of new debt "is unequivocally a step away from - not toward - reducing state deficits," Berry said.
And rising annual payments to pay off that debt handcuff what the state can spend in the future, he said.
Berry said state government's worsening debt load is irresponsible and risky. That amount of new debt "is unequivocally a step away from - not toward - reducing state deficits," Berry said.
And rising annual payments to pay off that debt handcuff what the state can spend in the future, he said.
"If you spend a greater share of your budget on debt service year after year, it leads to one of three things - painful future cuts in services the public expects, significant tax hikes in a high-tax state or even more assumption of debt, which has been the choice of the governor and Legislature over the past six fiscal years," Berry said. It's another reason Wisconsin has the largest deficit of any state, under the so-called generally accepted accounting principles, or GAAP, system of budgeting, Berry noted. Berry said the state's annual deficit under GAAP - which reflects the imbalance between future spending commitments and expected tax collections - is $2.1 billion. But state officials discount the GAAP budgeting method. Wisconsin is unique because it promises to return $6 out of every $10 collected in future taxes to local governments - a cash-flow cycle that GAAP goes not take into account, officials said.
