While federal debt continues to climb, Wisconsin’s state-local debt situation is showing some signs of improvement. Combined state-local debt grew 0.3% in 2013, its smallest increase since 2008. State debt here totaled $13.7 billion, up 1.6% from 2012. Local debt fell 1.0% to $13.7 billion, its second consecutive decline. School, county, village, and town debt all declined last year.
During the last recession, debt at the federal, state, and local levels rose. Gross federal debt increased at an average annual rate of 13.7% during 2008-10. Although the increase was less and the timing slightly different, Wisconsin state debt also rose, growing 7.2% in both 2010 and 2011. And, after declining early in the recession, local general obligation debt was up 5.3% here in 2010.
As many Americans learned in recent years, borrowing is not risk-free. Done to excess, it leads to burdensome debt service payments. A slowdown in borrowing is a welcome sign for governments, taxpayers, and those who depend on public services.
In the years since the downturn, as the economy recovered, debt growth slowed and, for some Wisconsin governments, even declined. While cumulative federal debt continues to climb, and economists warn of further increases in the coming years, Wisconsin’s state-local debt situation is moderating.
Federal debt held by the public totaled nearly $12 trillion in 2013, equal to 72.1% of gross domestic product (GDP). The Congressional Budget Office projects it will surpass $20 trillion by 2024 and exceed 100% of national output by 2036. U.S. debt increases did slow from 8.7% in 2012 to 4.2% in 2013; however, they are expected to accelerate in years to come.
Meanwhile, in Wisconsin, a consistent decline in debt growth offers hope. State debt rose 1.6% in 2013, and total local debt declined in each of the past two years. Municipal, school, and county debt all fell last year.