By Adam Tobias | Wisconsin Reporter
MADISON, Wis. — A lavish home entertainment system. A reliable used car. A trip to Europe. Braces for your child. A semester at the University of Wisconsin-Madison.
Those are all things expected to come with a price tag of $4,400.
But that amount is also what each Wisconsin resident would have to pay to cover the state’s debt in 2013, according to an annual Financial State of the States report from Truth in Accounting, an economic think tank based in Chicago.
Truth in Accounting’s analysis found that Wisconsin only has $13.1 billion in appropriate assets to pay $21.5 billion in bills as they become due.
The $8.4 billion shortfall represents compensation and other costs incurred in prior years that should have been paid in those preceding years. Instead, these costs have been shifted to future taxpayers.
The shortage puts Wisconsin as the 30th worst state in terms of each taxpayer’s share of state debt. The $4,400 is 10 percent of the average citizen’s personal income of $43,149, the report says.
But things have been looking up since Republican Gov. Scott Walker took office in January 2011, when the debt for each Wisconsin resident was $5,700.
The Walker administration points to the state’s “fully funded” pension plan as part of that improvement.
Wisconsin has the strongest public employee retirement system, with a 99.9 percent funded ratio and an unfunded liabilityof $18 per capita, according to a study from Morningstar, an independent investment research firm.
But Truth in Accounting discovered that $1.1 billion in retirement benefits have been promised but not funded. Because of the confusing way the state does its accounting, only $468.9 million of that liability is reported on Wisconsin’s balance sheet, according to the report.
“One of the reasons Wisconsin is in this precarious financial position is state officials use antiquated budgeting and accounting rules to report Wisconsin’s financial condition,” Truth in Accounting says. “Since employee retirement benefits are not immediately payable in cash, the related compensation costs have been ignored when calculating balanced budgets.”
Lawmakers tend to use this practice because they gain political favor by promising certain benefits, such as retirement compensation, the Truth in Accounting report states. But money usually isn’t put aside to pay for those benefits, leaving taxpayers to foot the bill sometime down the road.
“That’s what politicians do … pensions and retiree health care, they don’t have to write the check for that this year,” Sheila A. Weinberg, founder and CEO of Truth in Accounting, told Wisconsin Reporter. “So, a lot of states will go ahead and not include all of that total compensation cost in the current budget.”
The nonpartisan Truth in Accounting produces annual financial reports of all states to expose expenses that do not appear on accounting books. The 2013 State of the States analysis found more than a $1 trillion in debt across all 50 states.
The five “sinkhole states” with the highest debt per taxpayer are Connecticut, $48,100; Illinois, $43,400; New Jersey, $36,000; Massachusetts, $28,000; and Hawaii, $27,000.
The top five “sunshine states,” which all have surpluses, are Alaska, $46,900; North Dakota, $22,300; Wyoming, $20,200; Utah, $2,700; and South Dakota, $2,700.