S&P Sees Stabilized State

After two-and-a-half years with a negative outlook, Florida was returned to stable by Standard & Poor’s on Tuesday.

“The outlook revision reflects our view of the progress the state has made in addressing its structural imbalance through significant cost-cutting measures adopted in fiscal 2012 and maintenance of strong reserves,” said analyst John Sugden-Castillo.

The agency affirmed its AAA rating on the state’s full-faith-and-credit borrowings, including the State Board of Education’s Public Education Capital Outlay bonds. The change in outlook came as the state prepared to sell $224 million of PECO refunding bonds on Wednesday rated AAA by Standard & Poor’s.

Analysts said the decision to return the state to a stable outlook reflected “significant progress” in restoring structural budget balance, the phase-out of federal stimulus funding, and recognition of other budgetary pressures.

A further concern is weakening the state’s economic base should a catastrophic hurricane hit, or if the state is forced to issue debt that increases the tax-supported debt burden for residents above state peers.

Those conditions could lead Standard & Poor’s to lower its ratings on the state as well as the ratings on the Florida Hurricane Catastrophe Fund, Citizens Property Insurance Corp. and the Florida Insurance Guaranty Association.

Though the three are stand-alone credits, Standard & Poor’s views them as linked to the state’s credit and economy.

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