BRADENTON, Fla. - On the heels of worsening economic news for Florida that will force it to dip into budget reserves, Tropical Storm Fay threatens to drive the state's economy further into decline.
In a letter sent Wednesday to President Bush seeking an emergency declaration for the state, Gov. Charlie Crist said Florida has spent $25.5 million so far responding to Fay.
"The state's ability to respond has been affected by the state's current revenue shortfall, $1.8 billion." Crist wrote.
While never reaching hurricane strength, Fay has produced tornadoes, wind damage, and floods. Some areas of the state have received historic rainfall amounts of more than 30 inches since Fay struck the Florida Keys on Monday. Since then, the storm emerged over water and made a second landfall Tuesday in Collier County on the southwest coast of the state. Fay then slowly crawled across the state, stalled on the east coast near Cape Canaveral, and was expected to move into northern Florida counties today.
Crist said the state anticipated significant agricultural losses in at least 26 counties and beach erosion in 10 counties. More counties may be impacted before the storm exits the state.
Crist said Tuesday he would dip into state reserves to counter much of an expected fiscal 2009 deficit, although he was not certain that predictions concerning the amount of the deficit were accurate. He was referring to estimates received from state economists a week ago that said they believe revenues supporting the state's $66 billion budget would be $1.8 billion less than previously estimated.
The impending deficit will be offset somewhat by $326 million that was carried over from the previous fiscal year and was not appropriated by lawmakers in anticipation that Florida's economy would continue to tailspin.
The Legislature also passed a law earlier this year authorizing Crist to deal with a deficit by using up to $600 million from budget reserves and up to $1 billion from the Lawton Chiles Endowment, which is the fund where the state's national tobacco settlement proceeds are deposited.
Florida does not have a state income tax, so the state budget relies primarily on sales and use taxes.
Late last week, Crist launched an economic stimulus program ordering state agencies to accelerate nearly $8 billion of construction projects - portions of which will be funded with debt.
The state's economy has declined faster than anticipated, and it has impacted some credit ratings. In April, Fitch Ratings downgraded the state's environmental bond programs to A-plus from AA-minus, citing the "rapidity and depth of revenue loss associated with the state's real estate correction and its impact on debt service coverage." The bonds are secured by a tax on real estate sales that has plummeted along with real estate sales.
Moody's Investors Service and Standard & Poor's maintained ratings on the environmental bonds of A1 and AA-minus, respectively.
On March 19, Moody's placed a negative outlook on Florida's general obligation debt and certificates of participation out of concern over the state's waning economy. At the same time, Moody's affirmed its Aa1 GO rating and its Aa2 COP rating. Florida's GO rating is AAA from Standard & Poor's and AA-plus from Fitch.