State of Florida retains AAA Fitch rating

by | Aug 18, 2023

  • Florida has maintained its AAA score from Fitch Ratings, indicating a strong ability to meet financial obligations and the lowest expected default risk.
  • The state’s revenues, primarily from sales tax receipts, are projected to grow based on economic and demographic estimations, despite a constitutional ban on a personal income tax.
  • Florida’s creditworthiness is supported by expenditure flexibility, minimal debt and retiree benefit expenses, and a low long-term liability burden, according to the report.

The state of Florida has upheld its AAA score from Fitch Ratings, as outlined in the credit agency’s report issued this week.

The rating signifies the lowest anticipated default risk and is reserved for entities demonstrating a strong ability to honor financial obligations.

“Florida’s revenues are primarily driven by sales tax receipts, and have exhibited more economic sensitivity than other U.S. states on average,” reads the report. “Fitch anticipates Florida revenues will grow on a real basis based on the state’s economic and demographic fundamentals. The state exhibits very broad revenue-raising authority despite a constitutional restriction on the levy of a personal income tax.”

The report pointed to the state’s expenditure flexibility, coupled with minimal expenses linked to debt and retiree benefits. Notably, the general revenue budget is heavily influenced by education and health services, including Medicaid, which collectively constitutes around 80 percent of total appropriations. Florida’s minimal long-term liability burden, well below the national median, also bolsters its creditworthiness, per Fitch.

Upon receiving the AAA rating, Gov. Ron DeSantis highlighted the contrast between Florida’s score and the recent AA+ downgrade of the Federal government’s credit rating.

“Today’s announcement reinforces that Florida’s track record of conservative policy, early debt repayment, and strong reserves is the blueprint for states and the federal government to follow,” said DeSantis. “As excessive spending and irresponsible governance ballooned our nation’s debt to detriment to its credit rating, Florida remains the standard-bearer for smart fiscal policy.”

Last month, the state made an early paydown of $400 million towards active debt through the payoff of bonds prior to maturity, avoiding accruing interest costs.

The payoff was facilitated through the Debt Reduction Program, which was established as part of the state’s Fiscal Year (FY) 2023-24 budget. Amidst its inception, DeSantis maintained that the program would allow the state to eliminate various avenues of debt ahead of schedule.

The reduction program, which operates within the Division of Bond Finance, confirmed two transactions within the past week that terminated outstanding taxable Public Education Capital Outlay and State Revolving Fund bonds.


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