Bonds

The Florida Legislature is expected to give its final approval on Friday to the state’s $117 billion fiscal 2023-2025 budget.

The state Senate on Tuesday gave a green light to SB 2500, the general appropriations act, which now goes into a constitutionally required 72-hour cooling off period.

However, the agreement didn’t include any provisions that had been offered which would have accelerated the state’s efforts to shrink its debt portfolio.

Lawmakers had considered providing for the early retirement of some state debt as well as creating a state investment fund and a debt reduction program.

Still, about $200 million was included in the plan to reduce outstanding debt, about half of the $400 million the governor wanted.

“I am disappointed the Legislature didn’t pick up the debt reduction program,” said Ben Watkins, the state’s director of bond finance. “I thought that was really a fundamentally sound proposal but they didn’t take it up, it didn’t get any traction.”

When looking at the debt defeasance, Watkins said, it is a step in the right direction, despite the cut in the request.

“While it’s not the $400 million that was asked for, it is still a significant amount — $200 million is a significant amount. So I applaud their efforts for doing that,” he said.

On the debt side, he said, new issuance looks to remain fairly low for the year ahead.

“We really don’t have any new authorizations that are out of the ordinary,” he said. “We continue on path of having very little new money issuance. There’s been a fundamental shift over the last decade in terms of how our state government thinks about debt.”

The trend toward lower bond issuance started with Gov. Rick Scott’s administration, Watkins said, because he was a “debt hawk,” and this has transformed the way the state uses debt.

“Consequently, we have paid down a third of our debt — to below $20 billion,” Watkins said. “That’s $795 state debt per capita, every man, woman and child in the state. Compare that with the national debt, which is now $31.4 trillion — $95,000 for every man, woman and child in the United States. That is a breathtaking difference in philosophy and in financial management practices in how we run government in the state of Florida versus how it’s run at the national level.”

Much of the state’s funding for infrastructure projects over the past decade has shifted from bond issuance to a pay-go basis.

“Why? Because we have adequate resources available to pay for that,” Watkins said. “This has led to much less debt issuance overall to fund state infrastructure.”

The `state budget consists of $46.5 billion in general revenue and $70.5 billion in trust funds.

The plan anticipates increased reserves, about $10.9 billion in total reserves, $5.3 billion in unallocated general revenue fund, $4.1 billion budget in the stabilization fund and $1.4 billion added to the emergency preparedness and response fund.

“Our budget is a fiscally responsible, balanced approach to making key investments in our environmental, housing, and transportation infrastructure and our clean water resources, while maintaining a historic rainy-day fund that ensures we remain prepared to tackle any future challenges that may face our state,” said Appropriations Committee Chair Sen. Doug Broxson, R-Pensacola.

He noted the significant impacts that rising inflation is having as residents draw down from their savings, increase their use of credit and change their spending habits.

“In this budget we go to great lengths to keep Florida affordable for growing families, setting aside funding for historic tax relief opportunities that create savings on a variety of everyday goods,” he said.

“Our budget also accounts for the significant investment in workforce housing already passed in the Live Local Act, as we work to increase opportunities for our workers to find attainable housing close to the communities they serve,” Broxson said.

“We continue to be in a very unique situation with our budget,” said Senate President Kathleen Passidomo, R-Naples. “We are seeing increases in revenue and record low unemployment, yet we know Floridians are suffering greatly from inflation, and nationally our economy is projected to face some challenges.”

With the state seeing increases in revenue, she said, it has an opportunity to make generational investments in many areas of infrastructure.

“While this is positive, we cannot ignore the economic challenges already impacting Florida families and those clearly on the horizon nationally,” she said. “Rather than spending all we have, this budget holds the line, setting aside historic reserves and providing for tremendous tax relief opportunities that will reduce the cost of living for Florida families in a meaningful way.”

Under the budget plan, transportation, tourism and economic development receive a $21 billion allocation.

Sen. Ed Hooper, R-Clearwater, said the state’s transportation infrastructure was the foundation for its vibrant and diverse economy.

“This budget makes historic, generational infrastructure investments, including $4 billion for the ‘Governor’s Moving Florida Forward’ initiative that will help keep our economy strong and growing, creating even more good paying jobs in communities across the state,” he said.

Agriculture, the environment and general government purposes will be allocated $11.3 billion.

Under this, the Department of Environmental Protection will get $4.9 billion, with $1 billion going toward water quality improvements, $575 million to the Everglades restoration, $300 million to the flood and sea-level rise program and $1 billion to the Florida Forever programs and land acquisition.

Separately, the state House passed legislation to prohibit the use of a central bank digital currency (CBDC) in Florida.

SB 7054, HB 7049, amends the state’s Uniform Commercial Code to prohibit the use of a CBDC in Florida because of what lawmakers said were inherent risks of a centrally controlled monetary policy. 

“The use of CBDC would open the door to government surveillance and tracking of what you spend money on and could prevent you from buying the products or using services that you want,” said Rep. Wyman Duggan, R-Jacksonville, the bill’s sponsor.

“Floridians will not be guinea pigs in the Biden administration’s latest economic takeover attempt,” said House Speaker Paul Renner, R-Palm Coast. “CBDCs could expose its users to significant threats of loss of privacy and control.”

Lawmakers said the Federal Reserve could manipulate consumer behaviors by tracking and possibly interfering with what products or services consumers are buying.

In addition, a cyberattack on the CBDC network could disable the entire network rendering the currency worthless or unusable, according to lawmakers. 

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