California isn’t the only state with a debt problem: States and local governments have over $3.7 trillion in debt, according to a new report from the Treasury Department’s Inspector General for Tax Administration (TIGTA).

“State and local governments have outstanding debt of more than $3.7 trillion dollars in municipal bonds, and hundreds of millions of dollars in new municipal bonds are issued each year,” TIGTA announced today.

On the bright side, “the Congressional Research Service estimates that $309.9 billion in Federal tax will not have to be paid for Fiscal Years (FY) 2012 through 2016 because interest income from municipal bonds is exempt from Federal income taxes.”

The debt total reported by the government is lower than what was predicted by a recent independent private study. “State Budget Solutions‘ third annual State Debt Report shows that aggregate state debt fell from $4.24 trillion last year to $4.19 trillion this year,” The Washington Examiner’s Conn Carroll reported this week.