Every man, woman
and child living in the state of Wisconsin owes $3,500 to pay off state debt,
according to a report issued by a non-partisan think tank.

The Wisconsin
Policy Research Institute report released this week, written by WPRI points out that many debt collectors, says state bonding has been increasing over the
past 30 years, leaving Wisconsin with a total debt of $19.3 billion in December
2006. The state has moved from ranking 40th in outstanding debt per capita to 10th
nationally.

“When the state issues a bond, it gets the money right off
the bat, but then it has to pay it back over the course of 20 to 30 years with
interest, which ends up costing a lot of money in the long term,” Schneider
said.

Those in the private sector buy bonds from the state and
then cash them in 20 years later for the interest on top of the original
amount. Schneider said this can be a good idea if the state gains something
concrete from the bond issuance.

“In the past when the state issued bonds, it was essentially
just so they could buy buildings or roads, something that the state actually
owns,” Schneider said. “It makes sense to issue bonds for those purposes
because the state actually gains an asset. So, if the state gets in financial
trouble, the state can actually sell that asset and get its money back, maybe
even at a profit if the property goes up in value.”

The problem comes, Schneider said, when the state sells
bonds for things other than assets. For example, the state can issue bonds for
a transportation project and then use the cash originally intended for that
project to fill holes in the general fund budget. This helps pay for operation
costs like schools and local government aids.

“Then, in the next budget, the money for the ongoing
operations costs isn’t there anymore because they issued those one-time bonds,
so then they have to go back to fill that hole once again,” Schneider said.
“And that’s when the deficit comes in, because they have created the deficit in
the next budget to go find more money.”

The Department of Administration, which handles budget
affairs for Gov. Jim Doyle, said bonding was used in the 2007-09 Wisconsin State
budget passed by the Legislature in October. They authorized approximately $1.8
billion in bonds in this budget.

“By incurring debt, the administration was able to protect
public schools, aid local governments and maintain our transportation
infrastructure,” said Linda Barth, spokesperson for the Department of
Administration, in an e-mail. “In addition, it allowed us to free up money to
control increases in property taxes.”

Barth also said the new budget appropriates $530 million to
pay off principal and interest on tax-supported bonds. This totals four percent
of state tax revenue.

“The state borrows money and pays back the principal and interest
annually, just like a house mortgage,” Barth said.

But Schneider sees dollars being borrowed for things that don’t generate
assets for the state as a problem.

“When you take out a second mortgage on your house,
generally people do that to make an improvement to your house because it
increases your home’s value and you can hopefully sell it for more money in the
long term,” Schneider said. “But essentially what the state’s been doing is to
take out a second mortgage on your house and then using the extra money to
throw a pizza party.”

Schneider said he doesn’t see an immediate solution to this
problem.

“There is actually really — aside from the Legislature getting
it together, realizing this is a problem and voters actually demanding this of
their Legislature — not a whole lot can be done,” Schneider said.