Local Governments Across Wisconsin Dealing With Increasing Debt Burdens

Thursday, December 1st, 2022 -- 11:01 AM

(By Jenny Peek, Wisconsin Public Radio) Local governments across Wisconsin are dealing with increasing debt burdens, according to a new report from the Wisconsin Policy Forum.

Acording to Jenny Peek wtih Wisconsin Public Radio, the report found that total debt owed by the state's cities, counties, villages and towns rose by 5.4 percent to $11.04 billion in 2020, the highest amount on record.

Cities including Milwaukee, Madison and Kenosha hold the most debt, but Wisconsin towns have seen the fastest growth in borrowing since 2015. The Policy Forum looked at Wisconsin Department of Revenue data from more than 1,920 local governments from 2000 to 2020.

According to the report, on Dec. 31, 2000, local governments owed a total of $5.23 billion or $7.86 billion in 2020 dollars. Twenty years later, those same local governments owed $11.04 billion a more than 40.5 percent increase after adjusting for inflation.

The report points to several reasons why borrowing has grown over the last two decades, including a need to replace aging infrastructure and upgrade technology across the state. Interest rates have also been extremely low.

The report also points to state law that incentivizes taking on more debt. Levy limits in Wisconsin say that local governments can't raise property taxes by a greater percentage than the increase in new construction.

Levy limits matter for debt because property taxes used to pay for a local government's operating budget are constrained by the levy limit, but property taxes used to make payments toward debt are outside the levy limit.

And in Wisconsin, property values have risen, making it easier for local governments to repay their debts.

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