TALLAHASSEE?Florida will report in December that it has significantly reduced its outstanding debt for the second year in a row, and that continued refinancing of outstanding debt will save more than $1 billion on future interest payments, the state?s top bond finance official said Tuesday.
A second year of lower debt appears to portend a reversal of a long trend. Two years of reductions follow about a decade of increasing debt loads and represent the first year-over-year drops in 20 years.
In a preview of an annual report due later this year, Director of Bond Finance Ben Watkins told Gov. Rick Scott and the Cabinet that the year-end report is likely to say the state reduced its debt by about $1.5 billion this year, following last year?s reduction of debt by $500 million.
The main reason the state isn?t issuing new debt, primarily in its biggest borrowing program, the Public Education Capital Outlay, or PECO bonding program, because of lower revenue and efforts to be more frugal.
PECO bonding, which funds school construction, relies largely on revenue from utility taxes, known as gross receipts taxes, to pay back bondholders. Revenue from the tax has dropped in the down economy and there hasn?t been any money available for new construction bonding in the most recent year.
Lawmakers have also slowed down funding for land-buying for conservation purposes, another purpose for which the state has in the past borrowed more heavily.
Watkins also said the state has refinanced more than $6 billion in debt over the last three years ? nearly a third of the state?s entire debt portfolio ? to take advantage of low interest rates, allowing for a reduction in interest from 4.65 percent to 4.33 percent.