BRADENTON, Fla. — Fitch Ratings late Thursday placed a negative outlook on Florida’s full faith and credit bonds as well on its facilities pool revenue bonds, citing the severity of the deterioration in the state’s economy and revenues.
“Florida’s recent poor economic performance, one of the most negative of the states, reflects the state’s severe housing market correction,” Fitch said.
Nonfarm employment dropped 1.9% in October compared to the same month last year, reflecting a drop of 13.7% in construction employment. The state’s unemployment rate has risen to 7% compared to 4.3% in October 2007, the agency said.
“The state now does not expect a return to normal economic growth until the last quarter of fiscal 2010,” Fitch said. “Continually reduced revenue estimates during the current downturn have been followed by austere budgetary measures taken by the Legislature to ensure balance.”
Florida has taken steps to reduce its budget but also has used $672 million in budget stabilization fund monies — half the total available — to offset reduced fiscal 2009 revenue estimates. However, lawmakers still face a projected deficit of $2.3 billion through the end of the fiscal year,
The outlook change came as Fitch assigned an AA-plus to the upcoming sale of $200 million of full faith and credit public education capital outlay bonds, which were also assigned a negative outlook. A sale date has not been determined.
Fitch affirmed its AA-plus rating on approximately $13.2 billion of outstanding Florida full faith and credit bonds and its AA on approximately $400 million of outstanding facilities pool revenue bonds.
Moody’s Investors Service in March placed a negative outlook on Florida’s general obligation debt and certificates of participation out of concern over the state’s waning economy. The state’s credit is rated Aa1 by Moody’s and AAA by Standard & Poor’s.