How are nations’ and states’ fiscal responsibility measured? How are these fiscal responsibilities made transparent? The answers to both questions are by their credit rating. The credit rating analyzes the entities’ financial management practices, its expenditure and revenue controls and its long-term reserves foundation. Fitch’s credit rating scale ranges from ‘AAA to ‘D’. Ratings from ‘AAA’ to ‘BBB’ are described as ‘investment grade’ and ‘speculative grade’. Of course, the start of the alphabet letters and the triple letters ratings represent the highest form of credit ratings.
As we are all aware the United States recently received a downgrade to an “AA+’ rating. This was only the second time in US history this has happened. Fitch cited “fiscal deterioration over the next three years and repeated down-the-wire debt ceiling negotiations that threaten the government’s ability to pay its bills“ as the reason for the downgrade. In an economy that is already inflated, continual additional monies injected into the economy coupled with additional debt ceiling negotiations and massive debt ceiling increases could provide additional future downgrades. “11 other countries now boast a higher Fitch rating than the United States,” said Florida Department of Commerce J. Alex Kelly. “It is past time for the mismanaged federal government to look to Florida’s economic prudence and smart fiscal policies as a guide for how to get our nation back on track.”
Our Great Free State of Florida just received an “AAA” rating and an outlook of stable from Fitch. Florida received a “AAA” rating on its $6.4 billion full faith and credit bonds. The newly released Fitch Rating report highlighted that Florida “exhibits a very broad revenue-raising authority despite a constitutional restriction on the levy of a personal income tax.” Florida “maintains ample expenditure flexibility with low carrying costs related to debt and retiree benefits.” Florida’s low long-term liability is well below the median for U.S. states.” “Florida’s outstanding debt has declined steadily.” Florida’s “actual state revenue collections exceeded initial forecasts for the third consecutive year.” Florida’s reserves will provide the state “considerable financial flexibility to address future downturns in the economy.” Florida used its surge in revenue to “bolster reserves, cash-fund capital investments, boost K-12 spending, and deliver tax cuts for Floridians.”
All of these factors have helped to place Florida as number one in the nation for small business formations. Florida has kept corporate taxes low, with no state income tax, and has made sure that small businesses had startup capital and capital for expansions and funding for needed infrastructure. This has strengthened an already thriving economy. However, I would like to place the most emphasis on the following highlight of Florida’s flourishing economy and credit rating. “Florida has demonstrated a bias to expenditure reduction measures, in conjunction with reserve usage, rather than relying on revenue increases when necessary to maintain budgetary balance, even in core spending areas.”
Plain and simply said, balance the budget by reducing expenditures and eliminating the need for any additional taxation. These are measures taken even in times of budgetary financial distress. Our county needs a model to understand, and it isn’t the Nation’s model as we all feel it’s results in our daily living at the gas pump and grocery store. Just maybe they would look to model Florida and get us back on track. J. Alex Kelly, Florida Department of Commerce quote is some of the best advice I have heard lately, “look to Florida’s economic prudence and smart fiscal policies as a guide”. I will leave you with that thought and that concludes this week’s edition of The Straight Truth With Mary Ann Hutton.