The Wisconsin Taxpayer A monthly review of Wisconsin government, taxes, and public finance

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1 A SERVICE OF THE WISCONSIN TAXPAYERS ALLIANCE The Wisconsin Taxpayer A monthly review of Wisconsin government, taxes, and public finance $1,259 IN BRIEF Also in this issue: Wisconsin E-Government Rural Hospitals Tax More Studying Abroad Complexity of Tax Filing Cost Sharing or Consolidation wistax 79 Years of Research & Citizen Education $1,889 $2,695 $4,122 $4,326 Wisconsin State-Local General Obligation* Debt Per Capita *Includes state appropriation bonds. State and local governments borrow for many purposes. Traditionally, borrowing was done primarily to fund infrastructure or construction projects. Recently, however, it has also been used to pay for unfunded liabilities. According to the Census Bureau, Wisconsin had the 21sthighest per capita debt nationally in According to the state s official financial statements, Wisconsin had $11.3 billion of long-term debt at the end of fiscal State debt service was about 4.5% of total spending in 2009, up from 2.3% in From 1986 through 2008, county debt rose an average of 5.7% per year from $538 million to $1.8 billion. Wisconsin s Rising Public Sector Debt In both the public and private sectors, borrowing can be a useful tool to finance long-term projects, such as roads or buildings. But, as far too many homeowners and businesses have learned in recent years, borrowing is not riskfree; with debt comes a certain amount of danger. When borrowing becomes excessive, the payments required to service that debt become burdensome. And, with any kind of reversal in economic or household circumstance, those payments can quickly become unsustainable. Debt problems have reached the crisis stage in Greece, with several other European nations vulnerable. Japan s debt is approaching 200% of national gross domestic product (GDP), and the world s third-largest economy has been in the doldrums for years. Closer to home, U.S. federal debt held by the public is expected to approach 70% of total GDP in less than 10 years. Moody s is already warning that the U.S. government s Aaa credit rating may be at risk. The combined indebtedness of Wisconsin state and local governments has not reached federal levels. What is not widely known, however, is that, since 1990, it has grown faster. Between 1990 and 2009, the average annual increase in state and local debt here was 7.8% and 7.3%, respectively. Federal debt during the same period rose 6.2% per year. By comparison, Wisconsin personal income that is used to repay debt was up 5.0% per year. OVERVIEW Governments borrow for many reasons, including buildings, roads, sewers, and environmental cleanup. More recently, state and local governments have issued longterm debt to pay for the unfunded pension and health care liabilities of public employees. Types of Government Debt Generally, governments use two types of long-term debt general obligation (GO) bonds and revenue bonds. General obligation debt is backed by the full faith, credit, and taxing power of the issuing government. Governments are legally obligated to levy the taxes necessary to meet the debt service payments.

2 Here s the report you requested. It s our gift to you. Here s how to continue reading reports like this... Contributors of the Wisconsin Taxpayers Alliance (WISTAX ) receive our lead research periodicals free. Organized in 1932, WISTAX is a nonpartisan organization dedicated to public policy research and citizen education. WISTAX cuts through the spin of the professional politicians to give you facts.... and here s how you benefit. The most important part of being an annual WISTAX contributor is that you make sure Wisconsin s oldest and most respected source of the truth about state and local government continues its unique mission. Contributors also receive: 27 free issues of our bimonthly newsletter, Focus in-depth analysis of breaking news; Our monthly magazine, The Wisconsin Taxpayer valued research on Wisconsin government; Our annual tax guide, TAXES; Another way to stay informed. Reduced prices on special publications; Access to our first-rate research staff. Becoming a contributor is the most cost-effective way to obtain our research, but you can also subscribe to individual publications. The Wisconsin Taxpayer is our monthly research magazine that covers a wide range of topics, from state and local taxes to school test scores and municipal spending. Focus is our bimonthly newsletter offering analysis of breaking news. wis tax Date: Wisconsi isconsintaxpay axpayer ersalliance 401 North Lawn Ave. Madison, WI Phone: Fax: wistax@wistax.org Name: Organization: Address: City/Zip: I want to become an annual contributor to WISTAX and get my research periodicals free! ($89 minimum) I am contributing: $89 $100 $250 $500 Other $ I want to subscribe to The Wisconsin Taxpayer. One year, $17.97 Three years, $36.97 I want to subscribe to Focus. One year, $54.97 Three years, $ Payment enclosed Visa/MC/AmEx/Discover # Exp. Info Request

3 Revenue bonds are secured by revenues of the project being financed (e.g., dorm room fees) or by designated revenue streams (e.g., gas taxes or driver s license fees). For example, a village might issue revenue bonds to finance sewer construction, with the debt payments funded through a water/sewer fee charged to residents. More recently, the state has issued appropriation bonds, which are repaid only if the legislature appropriates sufficient funding in each budget. Although the state is not legally obligated to appropriate any repayment amounts, failure to do so would negatively impact the state s bond ratings. Debt Limits Wisconsin s constitution and statutes limit state and local borrowing. Our original constitution prohibited the state from issuing public debt except to repel invasion, suppress insurrection, or defend the state in time of war (Article VIII, Section 6) and for defraying extraordinary expenditures (Article VIII, Section 7). Despite the prohibition, for many years the state borrowed indirectly by creating nonstate dummy building corporations. Beginning in 1969, Wisconsin amended its constitution several times to allow state government to incur debt: to acquire, construct, develop, extend, enlarge or improve land, waters, property, highways, public buildings, equipment or facilities for public purposes (1969); for veterans housing loans (1975); and for railways (1992). Article VIII of the constitution also limits the amount of general obligation debt the state can incur. Section 7 limits GO debt to 5% of the aggregate property value in the state. Further, in any one year, the state cannot incur debt totalling more than 0.75% of total property value. State debt is further regulated by Chapter 18 of the state statutes. Article XI of the state constitution limits general obligation debt of counties, towns, cities, villages, K-8 and union high school districts, sewerage districts, and other municipal corporations to 5% of the value of taxable property within their jurisdictions. K-12 school districts are allowed debt totalling 10% of property value. State law limits technical college debt for purchasing school sites and for building and equipping schools to no more than 2% of property value. STATE GOVERNMENT DEBT According to the state s official financial statements, Wisconsin had $11.3 billion of long-term debt at the end of fiscal When the debt of component units, such as the Wisconsin Housing and Economic Development Authority (WHEDA), UW Hospitals and Clinics Authority, State Fair Park Exposition Center, Inc., and the UW Foundation, is added, the total rises to $14.5 billion. Primary Government The state s financial statement (Comprehensive Annual Financial Report, or CAFR) distinguishes between debt Page 2 The Wisconsin Taxpayer Figure 1: Tobacco and Postretirement Bonds Cause Debt Surge State Long-Term Debt, , ($ Billions) $12 $10 $8 $6 $4 $2 $0 for primary government and for component units. Primary government includes all state operations, while component units (listed above) are operations for which the state has financial accountability but that have certain independent qualities as well. From 1990 through 2009, Wisconsin s primary government debt what many analysts would consider state debt more than quadrupled, from $2.7 billion to $11.3 billion (see Figure 1). About 40% of the increase was due to $1.6 billion in bonds issued in fiscal 2002 to borrow against payments the tobacco industry had to make to the state stemming from court action, and $1.8 billion of debt issued in fiscal 2004 to pay for the state s unfunded pension and accrued sick leave liabilities. During the period, general obligation debt rose 139%, or 4.4% per year, while revenue bonding climbed 445%, or 9.3% annually. The Wisconsin Taxpayer Publication Number USPS Periodical postage paid at Madison, Wisconsin General Obligation Subscription Price: One Year, $17.97; Three Years, $36.97 Published each month, except July, by the Wisconsin Taxpayers Alliance, 401 North Lawn Avenue, Madison, Wisconsin Postmaster: Send address changes to The Wisconsin Taxpayer, 401 North Lawn Avenue, Madison, Wisconsin phone: fax: wistax@wistax.org Web site: Other Debt Revenue Bonds Officers and Board of Directors: Carol Ward Knox, Chair, Jefferson; J.R. Riordan, Vice-Chair, Madison; Jere D. McGaffey, Secretary-Treasurer, Milwaukee J.L. Adams, Beloit; M.D. Bugher, Madison; C.D. Fortner, Milwaukee; J.D. Quick, Manitowoc; D.R. Schuh, Stevens Point; T.L. Spero, Milwaukee Staff: Todd A. Berry, President; Kyle Christianson, Research Analyst; Dale J. Knapp, Research Director; Sandra Mumm, Business Manager; Kelly Pfeifer; Susan Ryan

4 General Obligation Debt. As of June 30, 2009, Wisconsin had $5.36 billion in outstanding general obligation debt. Since 2000, GO debt has risen an average of 5.1% annually, compared to 3.6% per year during the prior 10 years. The largest increases in GO debt occurred in , when it rose an average of 6.6% per year. In 2004, state GO debt was up more than 10%. Part of the rise during was due to shifting $1.1 billion from the transportation fund to help balance the state s general fund. Legislators authorized $815.5 million of GO debt to partially replace the transferred dollars. The Legislative Reference Bureau publishes in its biennial Wisconsin Blue Book total state debt subject to the debt limit as a percentage of statewide property value. In addition to GO debt, this calculation includes certain state-issued notes. As of 2007, debt subject to the limit totalled $5.9 billion and was just under 1.2% of statewide property value. Revenue Bonds. Wisconsin had $2.5 billion $446 per capita in outstanding revenue bonds in While GO bonding rose an average of 4.7% per year since 1990, revenue bonds climbed 9.3% annually, or nearly twice as fast. Most revenue bonds are typically for transportation 63.4% in Bonding for transportation rose more than 635%, or 11.1% per year, from 1990 through However, funding has gone through four distinct periods: Transportation revenue bonds nearly quadrupled from $206.1 million to $776.0 million Outstanding transportation bonds declined in three of four years, and the 2000 balance was about $7 million less than the $776.0 million balance in Transportation bonding increased at double-digit rates in each of the four years, rising an average of 15.4% per year to $1.36 billion During the five years, transportation revenue bonds rose a more modest 3.2% per year. However, in 2006 and in 2009, they climbed more than 7%. In addition to transportation, the state currently uses revenue bonds to provide loans and grants to municipalities for wastewater treatment planning and construction ($829 million) and to reimburse cleanup costs for soil and groundwater contamination ($89.3 million). Appropriation Bonds. As previously mentioned, the state has used two other forms of long-term debt in the last 10 years one to securitize the tobacco payments and one to pay for unfunded retirement liabilities. In 1998, Wisconsin and 45 other states settled a lawsuit with tobacco products manufacturers. Under the agreement, the state was to receive annual payments in perpetuity from the companies. Payments through 2032 were expected to total nearly $6 billion. In 2002, the state created the Badger Tobacco Asset Securitization Corporation, which issued $1.6 billion of long-term bonds to purchase the stream of tobacco payments. With the transaction, the state received about $1.3 billion in immediate cash, and the tobacco company payments were used to fund debt service costs. The lump sum received was used to balance the state budget. The bonds were expected to be paid off early, possibly as soon as In fiscal 2009, the state refinanced the tobacco bonds by issuing $1.5 billion of annual appropriation bonds. The new debt had a lower interest rate but was amortized over a longer period, and it generated about $300 million to balance the general fund. Rather than an estimated 2018 payoff date, the new bonds are expected to be paid off in A second large bond issue occurred in fiscal 2004 when the state sold $1.8 billion of annual appropriation bonds to pay the state s liabilities for unfunded pension prior service and unfunded sick leave conversion. Due to previously enacted retroactive improvements in state pension benefits, participating governments were required to make additional contributions to fund the new benefits. Like some local governments, the state issued bonds to pay its $730 million liability. State government allows employees, upon retirement, to apply unused sick leave credits to health insurance premiums. Previous funding deficiencies and benefit improvements resulted in an unfunded sick leave conversion liability of almost $600 million. Annual appropriation bonds were issued to fund this liability. Other Debt The CAFR also reports debt for component units, which are somewhat separate from state government. Since 1990, long-term debt for The largest increases in GO debt occurred in , when it rose an average of 6.6% per year. The state refinanced tobacco bonds in fiscal 2009 to help balance the state budget. Page 3

5 State debt service was 4.5% of spending in 2009, up from 2.3% in In 2008, counties had $1.8 billion in GO debt and $185.9 million in revenue debt. these units increased 73.3% to $3.2 billion, or an average of 2.9% per year. Most of this debt was for WHEDA ($2.9 billion), which provides low-cost mortgages to moderate- and low-income individuals purchasing a first home. WHEDA also works with developers to finance affordable rental housing. WHEDA does not rely on state tax dollars to fund its operations. A much smaller amount of debt was for the UW Hospitals and Clinics Authority ($242.1 million), the State Fair Park Exposition Center ($40.8 million), and the UW Foundation ($10.1 million). While these long-term debts are not the legal obligation of the state, many would argue the state has a moral obligation to repay them should the underlying entity encounter financial difficulties. Debt Service State debt service totalled just over $1 billion in 2009, or about 4.5% of total state spending (see Figure 2). In 1990, debt service was 2.3% of expenditures, and it hovered around 2% through From 2002 to 2009, debt service rose fairly steadily. Approximately 40% of the increase was due to repaying debt from the bonding for tobacco payments and unfunded liabilities. Another 40% was due to increasing general obligation debt payments. About 10% was due to rising payments on transportation bonds, with other revenue bond payments accounting for the remainder. Tobacco Bonds. The increase in debt service due to the tobacco securitization is complicated. Under the tobacco settlement, the state received about $126 million per year from tobacco companies from 1999 through That figure is expected to rise to nearly $190 million by Without securitization, the state would 6% Debt Service % of Total Expenditures, % 2% 0% 2.3 Figure 2: Debt Service Share Rises * *Estimated. have likely spent each year s payment in the year it was received. With the securitization, tobacco company payments are funding debt service rather than programs. In one sense, there is no change in spending, only a shift in how that spending is classified (debt service vs. a particular program). However, since all of the securitization proceeds were spent in , the tobacco revenues are paying for past, rather than current, spending. Unfunded Liability Debt. Issuing debt to pay the state s unfunded pension liability was not unusual. Many local governments have done the same thing. The Wisconsin Retirement System (WRS) effectively charges a 7.8% interest rate on outstanding balances. Borrowing money at a lower rate to pay off the debt is often fiscally prudent. In this case, the debt service payments are really a reclassification from WRS payments to debt service. Transportation. Debt service on transportation revenue bonds has increased 531% since 1990, from $24.0 million to $151.2 million. Double-digit increases occurred in eight of the 19 years. The largest increases were 70.6% in 1993 and 27.0% in More recently, transportation debt service increases topped 10% in 2002, 2004, 2005, and As a percentage of net transportation revenues, transportation debt service averaged 15.6% in In , that percentage averaged 27.4%. LOCAL GOVERNMENTS Available information on local debt is not as detailed as that for state debt. However, state publications shed some light on trends in local government general obligation borrowing. Long-Term Debt Like state government, municipalities and counties issue both revenue and general obligation bonds. While local GO debt information is available dating back to the 1980s, revenue bond figures are available only for recent years. In 2008, Wisconsin counties had $185.9 million in revenue bond debt, compared to $1.8 billion in general obligation debt. Municipalities reported $3.1 billion of revenue bond obligations and $5.7 billion in GO debt. The following discussion focuses on GO debt. Page 4 The Wisconsin Taxpayer

6 Counties. In 2008, Wisconsin counties reported $1.8 billion, or $319 per person, in longterm GO debt. Since 1986, county debt rose an average of 5.7% per year from $538 million to $1.8 billion. The per capita increase (4.9% per year) was smaller. After adjusting for population and inflation, county debt rose 44.7%, or 1.7% per year (see Figure 3). Counties reported debt in nine categories: police, fire protection, highways, storm sewers, water, electric, transit, schools, and other. In 2008, over 80% of county GO debt was in the other category. Next largest were highways (11.1%) and police (6.8%). Among the state s 72 counties, Adams County had the highest long-term general obligation debt, at $852 per person. Over half the county s debt was for highways. Following Adams were Douglas ($828), Iron ($775), Polk ($748), and Door ($719) counties (see Table 1). The majority of debt in these counties was in the other category. Two counties, Waushara and Clark, reported no long-term general obligation debt in 2008, while Dodge and Iowa counties both had less than $1 million. A complete list of debt for all Wisconsin counties, municipalities, and schools is available on the WISTAX Web site ( Municipalities. Total municipal debt rose 239.0% between 1986 and 2008, or an average of 5.7% per year. Village debt rose the most, followed by towns and cities. Cities. Of the three municipal types, cities had the most debt, $4.1 billion in However, on a per capita basis, cities ($1,307) had $1,600 $1,200 $800 $400 $0 Figure 3: Local Governments Incur More Debt Per Capita Debt Service, 1986 and , , Counties Villages Cities Towns K-12 Tech (actual) 1986 (inflation-adj.) 2008 less long-term GO debt than did villages ($1,502). City debt rose 206%, or 5.2% per year, from $1.4 billion in 1986 to $4.1 billion in On a per capita basis, debt rose 4.5% annually. After adjusting for inflation, per capita debt averaged annual increases of 1.3% per year. The City of Green Lake ($4,092) reported the highest per capita debt among all Wisconsin cities (see Table 1). Although the majority of the city s debt was in the other category, over one-quarter was for roads and highways. Other cities with debt exceeding $3,000 per resident included Eagle River, Middleton, Monona, Delavan, and Shell Lake. Among these cities, 42.5% of debt was for roads and highways, while 39.5% was for other. Only three of the state s 190 cities reported no 2008 general obligation debt: Buffalo City, Augusta, and Saint Francis. The cities of Galesville, Crandon, and Pittsville each had less than $200 per capita in GO debt. Wisconsin municipal debt rose an average of 5.7% annually from 1986 through Table 1: Debt Amounts Vary Within Counties and Municipalities 2008 Long-Term General Obligation Debt, Per Capita Debt, Top and Bottom Five Counties Cities Villages Amount P.C. Amount P.C. Amount P.C. Adams $18,597,654 $852 Green Lake $4,747,263 $4,092 Egg Harbor $4,354,070 $15,606 Douglas 36,680, Eagle River 5,660,784 3,450 Sister Bay 12,755,000 $12,884 Iron 5,461, Middleton 56,998,415 3,361 Fontana 22,705,946 $12,116 Polk 34,305, Monona 26,715,000 3,260 Ephraim 3,092,067 $8,686 Door 21,785, Delavan 25,817,730 3,059 Lake Delton 22,149,549 $7,996 Avg. 25,145, Avg. 21,501,750 1,298 Avg. 3,185,861 $1,095 Marathon 3,650, Crandon 304, Iowa 551, Galesville 28, Dodge 800,000 9 Buffalo City villages reported no debt Clark 0 0 Augusta 0 0 Waushara 0 0 Saint Francis 0 0 Page 5

7 School debt had its fastest growth in the 1990s due to increased referenda. County debt service payments increased 6.1% annually from 1986 through Page 6 The Wisconsin Taxpayer Villages. Over the past two decades, villages have grown faster than cities and towns. From 1986 to 2008, total village populations grew 57.3%, compared to less than 14% for both cities and towns. Property values also increased faster: 509.7% in villages vs % in cities and 335.5% in towns. More rapid growth often leads to greater infrastructure costs, which are typically financed through debt. Village debt totalled $1.3 billion in 2008, or $1,502 per person. Aggregate debt increased 440% (8.0% per year) from $236.6 million in However, when population changes and inflation are factored in, real per capita village debt rose 74.8%, or 2.6% per year. The village of Egg Harbor (Door County) had the highest per capita debt in 2008, at $15,606. Nearly all of Egg Harbor s debt was in the other category. In addition to Egg Harbor, other villages with relatively high debt per capita included Sister Bay, Fontana, Ephraim, and Lake Delton all in vacation areas. Sixtyeight villages reported no general obligation debt in Towns. Towns are less likely to borrow than cities and villages. In 2008, towns had $354.6 million in total debt, or $210 per capita. Debt was up 334% from $81.7 million in From 1986 through 2008, real per capita debt rose 3.1% annually. The Town of La Pointe in Ashland County had the most long-term general obligation debt per capita ($9,645), with 91% of it highway debt. Following La Pointe were Gibraltar ($3,096) in Door County and Bell ($3,063) in Bayfield County. Over half of all towns in the state reported that they had no debt in Schools. Most school debt is due to building construction or renovation, though some districts have borrowed to pay off unfunded pension liabilities. Due to increases in referenda in the mid-1990s, school debt rose substantially. K-12. Wisconsin s K-12 school districts had $5.1 billion of debt in fiscal , or $901 per capita. Debt totalled $464.5 million in 1986, but climbed an average of 11.5% annually through Debt grew fastest between 1991 and 2001 (18.9% per year), largely due to new school referenda. During that period, voters approved $4.8 billion of bond referenda. Because populations are not available for individual school districts, debt totals by district are compared relative to enrollment. In , Wilmot Union High School reported the most per student debt ($33,598). Among K-12 districts, debt per student was highest in Maple ($26,950), Spooner ($26,373), Northland Pines ($25,838), Chilton ($21,537), and Monona Grove ($21,492). Eighteen school districts reported no debt in Technical Colleges. Limited in the amount of bonded indebtedness they can carry to 2% of equalized property values, technical college districts generally had less debt than most other local governments. In 2008, the state s 16 technical college districts reported about $460 million of debt, or $81 per state resident, up from $88.8 million in 1986 ($36 real debt per capita). Debt information was not available for specific districts. Debt Service Just as borrowing has grown in cities, villages, and towns, debt service as a share of spending has also climbed. However, county debt service share was almost unchanged from 1986 through Appropriate levels of debt service vary by community. Some debt rating agencies suggest it should not exceed 15-20% of municipal budgets. However, consideration should be given for growth and special circumstances in individual communities before making conclusions about debt service levels. Counties. In 2008, counties spent $315.6 million on debt service, which includes principal and interest on GO debt, long-term notes, land contracts, and installment purchases. Debt service was up 270.2% (6.1% per year) from $85.2 million in County spending also rose during those years. In 1986, debt service accounted for 5.8% of expenditures. That figure reached 8.4% in 2003, 28% Figure 4: Debt Service Shares Vary Debt Service as % of Expenditures, % % % 6.4 Towns 5.8 0% Counties Villages Cities

8 before falling back to 5.9% in 2008 (see Figure 4). Villages. Village debt service rose fastest, up 550.1%, or 8.9% annually, during Unlike in counties, where debt service as a share of total expenditures was relatively unchanged, village debt service constituted an increasingly larger share of expenditures (see Figure 3). Between 1986 and 1990, debt service payments averaged 14.9% of total village spending. That share rose steadily in the years following, averaging 22.1% between 2004 and In 2008, debt service accounted for 25.6% of expenditures. Cities. Debt service payments were up from $266.8 million in 1986 to $816.6 million in When compared relative to total expenditures, debt service accounted for 14.9% of spending in 1986 and 18.1% in Towns. Debt service payments in towns were up 290.9% over the period studied, rising from $16.9 million in 1986 to $66.0 million in As a share of expenditures, debt service rose from 6.4% to 8.2%. NATIONAL COMPARISONS U.S. Census Bureau figures are the broadest measure of public debt, as they include debt for public improvements (e.g., roads, sewers, etc.) and debt issued for the benefit of the private sector (e.g., industrial development, pollution control, etc.). State-Local Debt According to the Census Bureau, Wisconsin state-local long-term debt totalled $40.7 billion in Of that, $11.1 billion was public debt for private purposes, which included credit obligations of the state or local government or of one of their independent agencies for the purpose of funding private sector activities. When that amount is excluded, Wisconsin s total drops to $29.5 billion, or $5,273 per person and 21st highest. Nationally, state-local debt excluding that for public purposes averaged $6,091 per capita. States with the most debt were New York ($10,433), Massachusetts ($9,099), Washington ($8,276), Alaska ($8,074), and California ($8,007). States with the least debt included Idaho ($2,045), Wyoming ($2,340), West Virginia ($2,478), South Dakota ($2,564), and Arkansas ($2,739). FEDERAL DEBT There are two measures of federal debt: gross federal debt and federal debt held by the public. Gross federal debt includes all outstanding debts of the federal government, as well as intergovernmental debts owed to a particular program (e.g., social security) or agency. Gross federal debt was $11.9 trillion in 2009 and is expected to reach $21.4 trillion in Debt held by the public is the most commonly used measure of federal debt and represents only what the federal government has borrowed through the financial markets. In 2009, this measure totalled $7.5 trillion, or nearly $25,000 per capita. Federal debt held by the public has risen an average of 8.8% per year since It rose more than 10% in 17 of those years, including recent increases of 10.5% in 2003, 15.2% in 2008, and 30.0% in Since 1993, Wisconsin s public debt rose 179.6%, or an average of 7.6% per year. Nationally, public debt climbed an average of 7.2% annually. In Wisconsin, state debt (up 9.9% per year) rose much faster than local debt (up 6.6% per year). Debt Service Wisconsin s 2007 debt service payments totalled $1.7 billion, or $314 per person. Statelocal debt service rose an average of 3.9% per year since 1993, just above the 3.8% national average. Wisconsin s debt service increase was 17th highest nationally. Debt service here claimed 4.4% of expenditures, 16th highest nationally. Massachusetts (7.4%), Hawaii (5.6%), New Hampshire (5.5%), and Rhode Island (5.3%) had the highest shares. According to Census figures, both nationally and in Wisconsin, debt service share has declined since Nationally, debt service claimed 5.4% of expenditures in 1993; in Wisconsin, the figure was 4.8%. However, the Badger State s national rank rose from 33rd in 1993 to 16th in DATA SOURCES: Congressional Budget Office; Federal Reserve; U.S. Census Bureau; Wisconsin Departments of Administration and Revenue; Wisconsin Legislative Fiscal Bureau; Wisconsin Legislative Reference Bureau; WISTAX calculations. In 2007, Wisconsin had the 21st-highest debt per capita nationally. Debt service here claimed 4.4% of expenditures, 16th highest nationally. Page 7

9 wistax wis Wisconsin Taxpayers Alliance 401 North Lawn Avenue Madison, WI PERIODICALS USPS WISTAX NOTES Wisconsin E-Government. Wisconsin has not fared particularly well in past interstate studies comparing information and services made available on state Web sites. However, it seems to have taken steps to improve its online resources, as the state had the 24th most comprehensive and accessible site nationally in 2008, according to the Brookings Institution. The state s rank was up from 42nd in 2007 and Web sites were evaluated on a number of criteria, including online publications, databases, payment of fees, accessibility, and readability. Rural Hospitals Tax. After approving a tax on most Wisconsin hospitals last year, Governor Jim Doyle (D) signed a law on April 19 that also taxes small, rural hospitals. The new 1.6% assessment is expected to generate about $10.6 million annually, which will be used to fund state health programs and increase tuition reimbursement for doctors who work in rural areas. It also will attract additional federal funds. The tax could bring $18 million in federal money to the state, as federal funds are distributed based on the amount a state spends on health programs. The measure was widely supported by the health community and passed the assembly and senate with bipartisan support. More Studying Abroad. Over 14% of UW System bachelor s degree recipients in studied abroad during their undergraduate tenure, up from 13.8% in and 13.2% in Madison (20%) had the highest share of graduates studying abroad, followed by Stevens Point (19.9%) and Eau Claire (19.6%). Parkside (2.1%) and Whitewater (4.8%) had the lowest percentages. Since , the number of UW students in study abroad programs increased 85%, according to the UW System. WISTAX FOCUS Complexity of Tax Filing. State income tax forms and instructions are increasingly filled with special provisions used by few taxpayers. This makes completing a return more difficult and more costly, as filers pay for help. How to increase cost, complexity of tax filing (Focus #5-10) examines why many Wisconsinites may have ceased to complete their own tax returns in favor of paid assistance. Although some taxpayers simply do not attempt to fill out their own form, blame also rests with elected officials of both parties who have added exclusions, deductions, and credits to curry voter and interest-group favor. These tax provisions accumulate over the years, adding pages and confusion to state tax forms and instructions. In recent years, credits that reduce income taxes owed have been particularly popular with state officials. Yet 15 of those credits are claimed by less than one-tenth of one percent (0.1%) of filers. Cost Sharing or Consolidation. The public understands cost savings from mass production: When more of a product is produced, its cost tends to drop. Many citizens expect average costs in schools or municipalities to fall as they become larger. Can cost sharing or consolidation save money? (Focus #6-10) analyzes K-12 school and municipal expenditures to see where cost savings do exist. Although smaller districts had higher per pupil administrative and transportation costs than larger districts, differences were much smaller in instruction and pupil services. Much of the same was found with municipal expenditures, with per capita police and fire costs actually rising with population. Moderate savings did appear possible in general government administration and street maintenance. The Wisconsin Taxpayers Alliance, founded in 1932, is the state s oldest and most respected private government-research organization. Through its publications, civic lectures, and school talks, WISTAX aims to improve Wisconsin government through citizen education. Nonprofit, nonpartisan, and independently funded, WISTAX is not affiliated with any group national, state, or local and receives no government support.