- Moody’s Investors Service reaffirmed Florida’s Aaa issuer rating, noting a stable outlook for its economy
- The agency attributed the rating to Florida’s effective fiscal management practices and economic resilience compared to other states.
- Moody’s also acknowledged potential risks to Florida’s credit rating, such as economic recession, a potential decrease in state reserves, and a recurring reliance on federal disaster relief.
Moody’s Investors Service reaffirmed Florida’s Aaa issuer rating on Monday, declaring a stable outlook for its economy despite a downgrade to the U.S. sovereign credit outlook.
The rating agency’s reaffirmation represents a strong confidence in Florida’s economic and fiscal health. In awarding Florida with the highest possible rating, Moody’s drew attention to Florida’s “effective fiscal management practices”, which are “anticipated to persist, thereby bolstering the state’s economic resilience.”
“The State of Florida’s stable outlook incorporates the expectation that sound fiscal management practices will continue through future economic cycles and administrations,” reads the latest report. “Moody’s expects continued commitment to maintain structural balance, along with maintenance of strong reserve levels to offset economically sensitive sales tax collections.”
Florida’s economy, which includes significant tourism and international trade sectors, boasts a $1.44 trillion gross domestic product, ranking fourth among U.S. states.
Withstanding anticipated economic growth, Moody’s identified potential risks that could impact Florida’s credit rating, including a recession, a decline in state reserves, and an increase in long-term leverage and fixed costs. Moreover, the state’s recurring reliance on federal disaster relief may preset future fiscal concerns, should large-scale storms continue to batter the state’s coastal regions.
“Florida’s expansive and highly developed coastlines magnify its dependence on periodic federal disaster relief, a growing challenge in view of climate change effects on the frequency and severity of tropical cyclones,” states Moody’s.
The confirmation of Florida’s rating aligns with similar assessments by other agencies, including Fitch Ratings, which awarded the state a AAA rating in August. Moody’s concurrently reaffirmed the credit ratings for Maryland and Virginia, citing the state’s proximity to Washington D.C.