October 31, 2014

A Florida TaxWatch economic report

What the Government Shutdown & Debt Ceiling Crisis Mean to Florida

| 10/15/2013

Importance of Capital Investment to Economy

Investment fuels economic growth. However, current uncertainty is holding back investment. The state of Florida, like most other states, has experienced sluggish growth since the end of the Great Recession. The uncertainty of the current situation is likely to further hinder this growth, and could potentially return the U.S. to a recession if necessary political action is not taken in a timely manner.

Florida’s budget and state debt
Like the vast majority of U.S. states, Florida has a constitutionally-required balanced budget, and passing this balanced budget is the sole requirement of the Florida Legislature every year. Something that is not required, but has impacted Florida in a positive manner, is the fact that Florida has paid off $3.6 billion in debt during the last three fiscal years.

Fiscal Year
Debt Paid off
2011 $500 million
2012 $1.5 million
2013 $1.6 million
Source: State of Florida 2012 Debt Affordability Report

This commitment to reducing its debt, as well as the improving budget situation, has improved Florida’s credit rating with bond rating agencies.

 

 

 

Conclusion

The general downside of the shutdown and debt ceiling crisis is that it may cause a drop in revenue collections, a risky situation for Florida’s upcoming budget projections.

The most recent Revenue Estimating Conference has projected an $845.7 million surplus for FY2014-15 (some from recurring and some from non-recurring sources), even when $1 billion in reserves are included.

The most recent Revenue Estimating Conference has projected an $845.7 million surplus for FY2014-15 (some from recurring and some from non-recurring sources), even when $1 billion in reserves are included. The loss of revenue from an extended shutdown could reduce these estimates.

This Florida TaxWatch report is also available in PDF format:
"What the Government Shutdown & Debt Ceiling Crisis Mean to Florida"

Although much of the public focus has been on the infighting and political theater in Washington, the federal shutdown and debt ceiling crisis have negatively affected Florida’s economy, and the longer the shutdown is in effect, the more damage will be done here at home. The global impact of the United States defaulting on its debt would be immense, and would certainly hurt the Sunshine State. No matter what the solution politically, these issues are not limited to Washington, and the impact to Florida and the other states must be a consideration moving forward.

Biscayne National Park
Snorkeling in Biscayne National Park, also closed due to the shutdown

Tags: Government/Politics & Law, Florida TaxWatch

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