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Budget pushes state debt past ceiling

By Associated Press
Published June 9, 2003

TALLAHASSEE - The $600-million in bonds in next year's budget for reducing class size will push the state's debt further above the target limit set by law, but Gov. Jeb Bush said there's no immediate cause for alarm.

In fact, Bush praised the Legislature for restraint and for using cash instead of issuing more bonds for some purchases of environmentally sensitive land.

"That kind of prudent budgeteering is heartwarming, if you will, and it deals with this issue of increasing debt," Bush said.

But he added there could be problems in the future if the debt trend continues.

"You can foresee if we don't make changes, four or five years from now, that we will have problems," Bush said.

With the bonds in the new budget, the ratio of annual payments on the debt to state revenues will increase to an estimated 6.8 percent, far beyond the target limit of 6 percent set in state law and nearly at the 7 percent cap.

The debt ratio first edged past the 6 percent level in March, when the state lowered its revenue estimates.

State law sets 6 percent as a limit that can be exceeded only if the Legislature makes a determination that it is in the best interest of the state and 7 percent as a firmer cap, which can be exceeded only in a critical emergency.

With the new bonds, the state's total indebtedness will exceed $20-billion, with about $400-million in capacity left before the 7 percent ratio is reached.

Bush stressed that Florida is still much better off than states with severe budget problems that are being forced to issue bonds to cover day-to-day operating expenses.

The state Constitution prohibits Florida from taking such action.

Dominic Calabro, president of the budget watchdog organization TaxWatch, said in the past decade the state has moved from a conservative approach toward bonding to a more aggressive one, tripling the amount of debt in 10 years.

"It's a slippery slope," Calabro warned.

[Last modified June 9, 2003, 02:03:18]


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