(The Center Square) — According to Fitch Ratings this week, Florida retained its top AAA score.
In a news release, Gov. Ron DeSantis contrasted that with the federal government, which Fitch recently downgraded to AA+, the credit rating agency’s second-highest score.
According to Fitch, this rating denotes the “lowest expectation of default risk. They are assigned only in cases of exceptionally strong capacity for payment of financial commitments.”
Florida’s economy is steadily growing, outpacing the 10 largest states in the U.S. for job and business growth, resulting in a budget surplus of over $20 billion and the early paydown of state debt by almost 25%.
DeSantis said Florida is in an excellent position to weather economic downturns because the state is flexible financially.
“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,” DeSantis said in the news release.
DeSantis added that the federal government’s irresponsible governance and excessive spending have ballooned the national debt to the point it is now affecting its credit rating.
In Fitch’s full report, several reasons are listed for Florida’s top rating. This includes the state’s revenue framework, which Fitch stated is very broad and done so without a personal income tax. The primary income tax for the state is its sales tax.
Another reason identified by Fitch is Florida’s expenditure framework, with the report stating that ample expenditure flexibility has been maintained, debt and retiree benefits have low carrying costs, and the state can broadly cut expenses where needed. Around 80% of Florida’s total general revenue budget goes to education and health and human services.
Florida’s long-term liability burden is one of the lowest in the U.S. and well below the median according to the report, which is also a key driver of the state’s top credit rating. The report also notes that the Sunshine State’s operating performance received an AAA rating.
Factors that could cause a negative downgrade to Florida’s rating include a sustained slowdown in population and business growth. Failure to implement policy measures could also play a part. However, the report states that would be contrary to Florida’s past actions and not what Fitch would expect.