Sales tax collections falling, value of the pension plan plummeting, money from property taxes declining. How much longer before the next dose of bad economic news is that Florida's bond rating has been altered downward?
Back in 2005, former Gov. Jeb Bush trumpeted the fact that Standard and Poor's increased the state's bond rating to AAA, citing the "state's strong reserves and long term planning to avoid budget crises" as reasons for the decision. The reason it was big news is that with a better bond rating comes a much better borrowing rate.
All of the rating agencies have placed Florida on a negative outlook, said Ben Watkins, director of the State Division of Bond Finance, although none have yet downgraded the state's actual rating.
But here's one key piece of information that won't please the rating agencies:
The Bush-Chiles legacy has all been wiped out. Florida's reserves are now down to the same level they were in 1999 when Bush came into office. It was Bush who first set up the Lawton Chiles Endowment that used money from the state's landmark settlement with tobacco companies. The intent of the endowment was to use interest money to pay for health and human services programs.
Right now it appears that the state will drain another $700 million from the endowment by June 15 in order to balance this year's budget. Lawmakers in the last year have also tapped most of the state's budget stabilization fund.
Watkins contends that the reduction in the level of reserves is just one factor and won't automatically lead to a downgrading of the bond rating. He says that the "overall state of the economy" is another "significant factor."
But he also concedes that the bond rating could be changed by anytime "when circumstances warrant" a change.
Comments