Cities, schools, counties benefit from low interest rates
Iowa State Treasurer Michael Fitzgerald is shown at the Iowa Capitol building in Des Moines. On Friday, he announced that state and local government debt rose 5.3% in fiscal year 2021 to $18.8 billion. (The Gazette)
DES MOINES — While the state continued its low-debt policy, local governments took advantage of low interest rates last year to take on debt and start infrastructure projects.
So while state debt has been reduced, the combined total of state and local government debt has increased 5.3% to $18.8 billion in the past fiscal year. is complete in June 2021, state treasurer Michael Fitzgerald said Friday.
This increase is the highest in a decade, when the average increase was 3%, according to figures provided by the office of the state treasurer.
Fitzgerald attributed the increase to local governments pursuing infrastructure projects when interest rates were low. He said his analysis was that these local governments were operating responsibly.
“I’m very comfortable with this (increase),” Fitzgerald said. “Local political divisions operate very responsibly. They have needs there (like) sewers and school buildings. …
“Last year was the time to borrow. … These communities have really hit the sweet spot when it comes to low interest rates and building infrastructure.
Total debt by level of government at the end of the state fiscal year, according to the state treasurer, was:
• Cities: $7.1 billion
• Area schools and education agencies: $4.9 billion
• State authorities: 3 billion dollars
• Regents Universities: $1.7 billion
• Counties: $1.1 billion
• Community colleges: $700 million
• State agencies: $414 million
The debt of public bodies decreased by 29% during the budget year.
Fitzgerald said the state was able to refinance its debt through the I-JOBS program — an $830 million program for disaster recovery and infrastructure projects after the 2008 floods — which was a factor. important part of the reduction of approximately $168 million in the State’s debt.
“When we first borrowed, we had such a large loan for I-JOBS that we had to have a very large reserve fund (over $100 million),” Fitzgerald said. “When we refinanced I-JOBS, … we were really able to remove the reserve funds and repay the bonds. That’s why we have such a big drop.
All political subdivisions and state agencies are required to annually disclose outstanding long-term obligations to the state treasurer. These obligations include bonds, notes, capital leases and loans.
Iowa had the 10th lowest total state and local government debt per capita in 2019, according to an analysis by Commodity.com.
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