CHICAGO — The debt burden of state and local government borrowers in Iowa rose in fiscal 2011 by 6.6% to $13.8 billion, according to a report published last week by Treasurer Michael Fitzgerald’s office.
Total debt outstanding stood at $13.8 billion in fiscal 2011, up from $12.9 billion a year earlier, according to the annual report. Debt levels have steadily risen and are up from about $4 billion in fiscal 2007. All political subdivisions and agencies of the state are required to disclose debt obligations annually to the treasurer’s office.
State agencies saw the biggest jump of 33% as their obligations rose to $1.1 billion in fiscal 2011 from $818 million a year earlier. Debt among counties rose by 23% to $829 million, with Polk County, which includes Des Moines, accounting for 35% of the total amount.
Cities carried the largest debt burden of $4.8 billion in fiscal 2011, up 5 % over the previous year. About 59% of debt issued by cities was backed by a general obligation pledge. About 35% of city debt funded utility and sewer projects.
School districts carried $2.7 billion of debt, up 9% from a year earlier, with most of it being sold to fund public buildings and schools. The University of Iowa Board of Regents increased its debt load by 4% to nearly $1.4 billion.
Though on the rise, Fitzgerald said the debt levels in the state are still among the lowest in the nation and the increase shows that public units of governments there are taking advantage of historic low interest rates to invest in key projects.
“It shows that Iowa is willing to move forward,” Fitzgerald said. “We are working to build and grow, but not at an outrageous rate.”
State debt has risen primarily to fund former Gov. Chet Culver’s $750 million Iowa Jobs program and a new prison. State debt played a central role in the race for governor last year with the Republican victor, Terry Branstad, critical of the state’s use of debt even in a low interest-rate environment. He attacked the Democratic Culver over the state’s management of the capital program.
A press release from Fitzgerald’s office defended the program. “The I-Jobs financing secured bonds to strengthen Iowa’s economy and help Iowa recover from the natural disasters of 2008,” it said. “I-Jobs bonds account for $160 million of the increase, while the state penitentiary bonds account for $130 million of the increase.”
Iowa wrapped up borrowing for the capital program last year. The state’s special obligation bonds are rated AA by Standard & Poor’s and Aa2 by Moody’s Investors Service. The state, which does not issue direct general obligation bonds, carries top issuer credit ratings from both agencies.
The state’s fiscal position saw little damage during the recession. It closed out the last fiscal year with more than $400 million in cash reserves and another $135 million in an emergency reserve. Lawmakers adopted a $6 billion budget that does not authorize any new borrowing.
Deputy treasurer Stephanie Devin said the state has no near-term borrowing planned and does not currently see any refunding opportunities.