Gov. Charlie Crist this morning dismissed a warning from Moody’s Investor Service that it would downgrade Florida’s credit rating if lawmakers failed to replenish reserve accounts that have diminished during his first two years in office.

“Possible downgrade list? Oooh,” Crist said, feigning fear. “So much for Moody’s.”

Crist usually insists that he’s “concerned about everything.” But asked about the report issued Tuesday from Moody’s, which placed the state on the “watchlist for possible downgrade,” the Republican showed his disdain by blowing air through his lips to make a “pffft” sound.

A downgraded credit rating could cost the state billions in interest payments at a time when the slumping real estate market and national credit crisis have forced lawmakers to cut the budget for three consecutive years.

“We need to use them,” Crist said about dipping into reserves.

Speaker Larry Cretul said Tuesday that the Senate needed to spend less.

Senate President Jeff Atwater is expected to address the state’s budget issue this afternoon. The fight between the House and Senate over how much to save for future years has forced Republican leaders to cancel five consecutive days of budget conference committees.

Atwater, whose chamber unanimously approved a cigarette tax hike and a package to bring in more money from gambling, has budget proposal that is about $550 million more expensive that the House. The major differences are the Senate spends more on universities, road projects and state salaries.

But Atwater opened budgets talk in December by highlighting his concerns about the state bond rating, saying a downgrade would amount to a “tax on our sons and daughters.”

“The ramifications of a reduced bond rating can be staggering. If we were to drop one single rating level our debt service would increase by $100 to $150 million per year over the life of those bonds.

“Extrapolating over a 30-year period, the additional burden our future generations would inherit would be in the range of $3 to $4.5 billion.

“This is nothing more than a tax on our sons and daughters, occasioned by failure to come to grips with the enormity of the challenges we face.”

The report from Moody’s says the state is at risk of being downgraded because “the fiscal stress being experienced by the state at a time when the economy is weakening.”

Here’s what the report says the state could do to prevent a downgrade:

• Restoration of a high level of reserves.

• Adherence to structural budget balance while also absorbing spending pressures.

• Adoption of budget with less dependence on nonrecurring solutions coupled with a plan to restore reserves over the mid-term.

Here’s what will lead to a downgrade from Moody’s:

• Further deterioration in teh state’s economic condition that exerts additional downward press on revenue performance and reserve levels.

• Further erosion in the employment base that continues to exceed the national average.

• Increased reliance on one-time solutions to balance budget.

• Lack of reasonable plan to restore reserve.

Tags: Charlie Crist, Jeff Atwater, state budget

This entry was posted on Wednesday, April 22nd, 2009 at 11:55 am and is filed under legislature. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.