During the campaign Gov. Rick Scott's aghast opponents made a mountain of the "record $77 billion budget" he signed this year. What they didn't mention was how much he and the Legislature saved Florida taxpayers.
I'm talking about the shrinking Florida debt.
Coolest part isn't the $4 million whittled off the state's $24.2 billion debt outstanding at the end of this fiscal year. It's the total $4 billion trimmed during the last four years.
Here's how the $4 billion breaks down year to year: $500 million reduced in 2011; $1.5 billion in 2012; $1.6 billion in 2013; and $400 million in 2014.
Scott's stinginess ended a disturbing upward trend that began after the turn of the century. (See the Florida Division of Bond Finance debt chart below.)
In 2000, Florida owed $18 billion. From there, the debt rose progressively every year, reaching a high of $28.2 billion in 2010. According to the office of the chief financial officer, had thattrend of increasing debt continued, Florida today would owe $32.2 billion -- 33 percent, or $8 billion more than it did at the end of this fiscal year.
The debt report made public at Tuesday's Cabinet meeting was perhaps the week's most underreported story.
Ben Watkins, head of the Division of Bond Finance, told the Cabinet Florida issued only $457 million in new bonds in the last fiscal year. That's 80 percent less than its historical annual rate.
If you're a fiscal conservative, you have to like this. Florida's "historical annual rate" was taking the state down a dangerous path.
All governments are measured on their ability to manage their finances and pay back what they owe. In issuing credit ratings, agencies such as Standard & Poor's 500 index evaluate criteria like financial management, budgetary performance, and debts and liabilities.
Debt matters to a state, just as it does to a family. The impact is the same.
If a family takes more money in, it has more to expand its budget. But it accumulates debt by spending on credit, taking out loans -- agreeing to buy now and pay later.
When too much of that happens, debt grows faster than principal payments can handle. It negatively affects the family's credit score, adds risk, giving new creditors an opportunity to raise interest rates. When interest rates rise, the family is paying more -- short term and especially long term.
The states closest to, or at loan-shark rating, say Bankrate.com, areIllinois, California,Arizona,Kentucky,Michigan,New Jersey and Rhode Island. These are the states thatfind it costing more to borrow money through the sale of bonds; down the road, their economic growth could be constrained.
No doubt Scott's near-moratorium on new debt since he took office has taken its toll. Very little new construction, particularly school construction, has been bonded in the last four years. But the state needed a tighter grip in 2011 and Scott applied it. How he will move forward to balance debt management with capital needs in his last term is still a question mark.
Part of the debt reduction accomplishment is the result of a significant amount of "refundings," according to the CFO's office, to take advantage of historically low interest rates.Refinancing activity over the past four fiscal years translated into debt service savings of approximately $1.25 billion.
Fairly impressive wheeling and dealing.
Oh, yes, and putting the kibosh on borrowing through bond purchase allowed the state to build up its budget reserve of $3.5 billion.
Where does the Sunshine State rank in terms of debt? Watkins said Florida, once gasping for breath under its debt burden, is doing well compared to the 10 largest states. He said it ranks eighth among the big states in per capita debt, at $1,059 per resident, compared to New Jersey, the highest, at just under $4,000.
This is a four-year-turnaround story Florida taxpayers ought to hear and appreciate.
Reach Nancy Smith at sunshinestatenews.com or at 228-282-2423. Twitter: @NancyLBSmith
