Scott-signed bill will hurt counties’ credit, Wall Street saysby John Kennedy | April 11th, 2012
Just last summer, Gov. Rick Scott was bubbling with good news, hailing the state’s suddenly improved credit rating when Standard & Poor’s boosted Florida’s outlook from negative to positive.
The agency touted the spending cuts he’d imposed.
But legislation Scott signed into law last month has had the opposite effect on Florida counties — which learned this week that Moody’s Investor Services has said HB 5301 will have “negative credit implications” for them.
Palm Beach County already expects to lose almost $8 million in state health care dollars under the bill, which the Florida Association of Counties condemns as a strong-arm tactic by the state.
Under the bill, state lawmakers agreed to reduce revenue sharing with counties by $70.5 million, part of a move to recover $325.5 million in Medicaid debt over five years.
Counties dispute the amount owed. They accuse the state of double-billing or demanding payments from them for treating Medicaid patients who turn out not to be county residents. When Scott signed the legislation, Martin County Commissioner Doug Smith, president of the Florida Association of Counties, called it “the worst kind of body blow to taxpayers.”
In its report to investors, Moody’s piles on. It said, “The lost revenues add another financial strain on counties already challenged by waning property tax and other operating revenue.”
While Moody’s stops short of downgrading Florida counties, the ratings agency does acknowledge the legislation puts a crimp on county finances. Moody’s concludes, “the increased withholdings of counties’ sales tax revenues will invariably reduce debt service coverage and bonding capacity.”