Municipal bond investors have been trying to adequately price in just what might actually happen in the coming Federal Reserve interest rate hike cycle. It turns out that there are now substantial discounts to net asset value in many closed-end funds that are helping to generate some incredibly high dividend yields, which are by and large tax-free.

Now a new report from Moody’s shows that the 50 states’ median net tax-supported debt (NTSD) declined in 2014. This matters — it is the first time this taken place in 28 years. The states’ median NTSD declined by $6.2 billion to $509.6 billion.

Some may argue that the number is manipulated. It was shown that some $5.3 billion of this change was attributable to Moody’s reclassification of the Texas’ general mobility fund debt to self-supporting. Still, overall debt levels were down by $900 million, and that would still be the best reading in 28 years.

This was the third straight year that the state median for NTSD per capita fell, down to $1,012 in 2014. And 33 of the 50 states saw a decline in the per capita metric. The top five states in NTSD per capita are Connecticut, Massachusetts, Hawaii, New Jersey and New York. The median for NTSD as a percentage of personal income fell to 2.5% for the second year in a row, thanks to a rise in personal income levels.

ALSO READ: States With the Fastest (and Slowest) Growing Economies

Moody’s said:

The 2014 decline follows three years of minimal growth in NTSD as states continue to be reluctant to begin new debt service commitments in the face of tight operating budgets and a slow and uneven economic recovery. Uncertainty over federal fiscal policy and health care funding have also contributed to states’ caution.

One issue here is that the use of general obligation (GO) bonds varies widely across states, with GO debt as a percentage of NTSD being 48%. On a nationwide basis, the GO debt accounts for 52% of total NTSD, followed by appropriation debt at 21%.

The silver lining is that Moody’s projects state debt levels will also stay flat in 2015. There is still a warning longer term: debt levels are expected to rise again as states seek to address deferred infrastructure needs in the context of stagnant federal transportation funding.

If you are unsure of what the NTSD really is, Moody’s defines it as follows: debt secured by state taxes or other operating resources that could otherwise be used for state operations, net of obligations that are self-supporting from pledged sources other than state taxes or operating resources.

Be advised that the NTSD does not include the debt of the local governments in each state.

ALSO READ: Many Closed-End Bond Funds at Huge Discounts to NAV

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