Note: This is the third in a series of columns on unfunded liability in the Wisconsin Retirement Fund - the first was published on July 25, and the second was published on August 15.

In 1999, Wisconsin’s local governments were given an opportunity: the state offered to let locals off the hook for a certain debt for 22 months, during which time the state would make payments for them.

Some local governments took the state up on the offer, and then spent their own money elsewhere. Others were more responsible, and continued making their own payments at the same time the state was making them.

The result for those communities: less long-term debt for their taxpayers.

Here’s how it happened: in 1999, Wisconsin’s Legislature decided that state employees needed better retirement benefits, so we made those benefits richer (I voted no) at a cost of $4 billion.

We’ve made similar improvements to WRS benefits several times over the past 30 years (see last week’s Notes for more details). That has resulted in the WRS having $2 billion less than it should: that’s the “unfunded liability.”

The unfunded liability gathers interest at 8% a year: it gets bigger if we don’t pay it down. Therefore, every participating government is required to make payments on its share. In 1999, the state offered to make the payments itself.

Paying down our unfunded liability faster makes good long-term sense. Some local governments saw it that way, and continued to make their own payments, even while the state made payments for them. Others let the state make the payments, and spent their own money elsewhere.

Nearly every local government and school district in the state takes part in WRS. Each of them “owns” its own share of that unfunded liability, just as it “owns” its employees share of the assets.

Three hundred thirty two local governments – roughly one out of four – have paid their unfunded liabilities off entirely. On the other hand, 470 local governments allowed their unfunded liabilities to grow last year. The State of Wisconsin let its unfunded liability grow, too, from $698 million to $713 million.

That’s $15 million more, growing at a rate of 8% every year, that the state’s taxpayers will eventually have to pay.

It’s also important to remember that each of us lives under several different layers of government, each of which has its own share of the unfunded liability. A City of Green Bay resident, who owns a $100,000 house, would have to add $373.64 to his property taxes to pay off his share of the Green Bay Area School District’s liability. Add another $274.61 for the City of Green Bay; $100.78 for Brown County; $235.61 for the State of Wisconsin; $12.01 for the Green Bay Metro Sewerage District; and $1.75 for CESA #7.

The total bill for a Green Bay taxpayer with a $100,000 home: $998.41.

Each year, the Department of Employee Trust Funds lists every government in the state, and how much each of them owes in unfunded liability. I’ve posted the most recent list here, listed alphabetically and by county, city, village, etc. Look up your local governments. Ask your local officials what they are doing about their unfunded liability. See whether they’ve kept up.