Some of Florida’s local governments and special districts experienced deteriorating financial conditions in fiscal 2009 that have been exacerbated by a trend of adding long-term debt to their balance sheets, according an annual report released last week.
The state auditor’s office came to that conclusion after examining the audits of 66 counties, 389 municipalities, and 781 special districts as well as financial reports of seven municipalities and 226 special districts.
The examination concluded that 95 governmental entities met one or more of the conditions specified in state law for an entity to be considered in a state of financial emergency, the auditor’s report said.
Another 92 entities reported that they were experiencing deteriorating financial conditions, an increase of 30% compared to the previous fiscal year. Special districts were primarily responsible for the increase.
The auditors office said distressed governments and districts have insufficient levels of unreserved funds, declining excess revenues over expenditures, increasing operating losses, low or declining levels of cash and investments, and increasing long-term debt.
Looking over a five-year period, auditors found that long-term debt as of September 2009 totaled $31.6 billion, an increase of $10.5 billion or 50%, compared to $21.1 billion in September 2004.
“Increasing long-term debt, especially when combined with the economic downturn … may result in the long-term debt exceeding a local government’s resources for paying the debt,” according to the auditors.
“The local governmental entity may, therefore, have difficulty obtaining additional capital funds, have to pay a higher interest rate on debt, and have difficulty repaying the debt,” the report said.
The auditor’s report is prepared so that the governor and top legislative officials can monitor fiscal trends.
