Budget belt-tightening and frugality has prompted rating agency Standard & Poors to boost its Florida credit outlook from negative to stable, an upgrade that will translate into more favorable interest rates.
The rating agency touted recent legislative actions to both reduce spending and hold some revenue back for a rainier day.
The outlook revision reflects our view of the progress the state has made in addressing its structural imbalance through significant cost-cutting measures adopted in fiscal 2012 and maintenance of strong reserves," said Standard & Poor's credit analyst John Sugden-Castillo.
The rating agency gave the states long-term education bonds AAA rating while maintaining a AA+ rating for legislative bond issues.
The outlook revision reflects our view of the state's improved revenue environment and a fiscal 2012 budget that is structurally balanced and improves reserve funding levels, the report concludes.
The rating agency, however, said risks remain going forward. Florida still remains a hurricane-prone state and could face severe financial hardship in the event of a major storm.
And despite a rosier long-term economic picture, Florida may lag behind the rest of the country in immediate recovery. Specifically, S&P said the inability of federal officials to come up with a debt-ceiling compromise could also hinder the states recovery and jeopardize its credit outlook.
Gov. Rick Scott, who campaigned on a platform of fiscal restraint, has publicly expressed his concern over the states debt load and its impact on Florida's reputation in the financial community.
On Wednesday, Scott told reporters the upgrade dovetails closely with his own efforts to improve the states business climate and create jobs.
Oh, thats good. That is great, Scott said. I think its very important. If we dont if our rating goes down it will cost us a lot of money in increased interest for the state. I am very cautious on any new debt in the state. That is great.
In a related development, Moodys Investors Service on Wednesday warned federal negotiators that failure in Washington to reach an accord that would allow the federal government to pay its bills could result in a downgrading of U.S investments.
Moody's was the first among the big-three rating agencies to place the federal governments AAA rating on review for a possible downgrade.
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