BRADENTON, Fla. – Florida’s debt is declining by the billions and its economy is “back on track,” according to experts watching the Sunshine state’s vital signs.
“We’re paying down more debt than new money issuance,” bond director Ben Watkins said Aug. 6 in a presentation to Gov. Rick Scott, Attorney General Pam Bondi, Chief Financial Officer Jeff Atwater, and Adam Putman, commissioner of agriculture and consumer services.
Because of historically low interest rates in recent years, the state’s outstanding debt was reduced by $3.5 billion largely through refundings to $24.6 billion in 2013 from $28.2 billion in 2010, Watkins told the Cabinet members.
The state’s debt has been reduced another $1.6 billion so far in the current fiscal year primarily because principal payments exceeded new debt issuance.
“The last five years, as a result of refinancing activity, we’ve issued 54 transactions totaling $8.2 billion for gross debt service savings of $1.4 billion,” he said. “That’s significant…that’s sort of an opportunity of a lifetime [that will] free up resources for other priority needs.”
Scott, who has said frequently that he is debt averse, noted that the state also repaid $3.5 billion borrowed from the federal government for unemployment benefits.
Watkins also read highlights from a recent report by Moody’s Investors Service titled “Florida Back on Track” and said it underscores the progress of the state’s economic recovery from the recession.
“Florida was one of hardest hit states in the recent recession, with unemployment spiking to 11.4% and a housing market bubble that burst into one of the worst real estate market declines in the country, leading to significant revenue fall-off and budget strain,” Moody’s said in the June 27 comment. “Revenue trends, year-end surpluses, and other economic indicators now show that the state’s recovery is well under way.”
Moody’s praised the state for its “sound fiscal management” and said the economy is improving, though the housing sector is still very slow, and the state continues to be exposed to revenue volatility and hurricane risk.
Since Florida has no state income tax, the budget relies on the state sales tax for nearly three-quarters of its funding.
The state’s implied general obligation rating is Aa1 by Moody’s and triple-A by Fitch Ratings and Standard & Poor’s.