BRADENTON, Fla. – Florida upsized two pending advance refunding bond issues by 70% due to the pending federal tax legislation.
An upcoming State Board of Education public education capital outlay refunding deal has been increased to $500 million. It was previously sized at $141.5 million.
A Department of Transportation turnpike revenue refunding bond auction is now set for $160 million. Initially, it was sized at $49.4 million.
“We’ve been reaching deeper into our bag for advance refundings that are farther out because of the potential that the clowns in D.C. will do away with advance refundings,” Ben Watkins, director of the Division of Bond Finance, said Friday. “And that’s why we upsized the loans, in anticipation that advance refundings will go away.”
Watkins said he wrote members of Congress to explain why “the direction they are headed is so wrong,” on the abolishment of advance refundings.
There was no response to his letter.
“That’s how much they care,” Watkins said.
“They have a complete lack of understanding and appreciation for what they are doing,” he said. “All they are doing is scoring the game and contributing to the deficit.”
Advance refundings over the next 10 years are projected to cost the federal government $17 billion, he said, pointing out that the amount pales in comparison to the $1.4 trillion being spent to enact tax reform measures.
Watkins said he can save $3 billion over 10 years doing advance refundings on various state bond issues.
“Eliminating advance refundings makes no sense,” he said. “All they are doing is making it more costly for state and local governments.”
The competitive PECO and turnpike advance refunding deals have been on the day-to-day calendar for some time. Per the state’s custom, Watkins decides the day a deal will be sold.
Both deals will be auctioned before the end of the year, he said. The division will release a notice of the sale 18 to 24 hours before bids will be taken.
The PECO bonds are rated Aa1 by Moody's Investors Service and AAA by Fitch Ratings and S&P Global Ratings. The turnpike bonds are expected to be rated Aa2 by Moody’s and AA by Fitch and S&P.