State of Florida Debt Overview Taxation And Budget Reform Commission Governmental Procedures And...
Transcript of State of Florida Debt Overview Taxation And Budget Reform Commission Governmental Procedures And...
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State of Florida
Debt Overview
Taxation And Budget Reform Commission
Governmental Procedures And Structure Committee
July 20, 2007
Presented by
The Division of Bond Finance
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Organization of the State
• Constitutional framework for debt
– General Principles• State general obligation bonds (full faith and credit) may only be
issued when approved by voters – Article VII '11(a)
– Bonds secured by taxes may be issued when authorized
by Constitutional amendment (voter approval)• No pledge of taxes without voter approval
– Revenue Bonds secured by non-tax revenues may be issued without voter approval – Article VII'11(d)
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Constitutional Authority for State Bond Programs
PECO Bonds Article XII, § 9 (a)(2)
Education Capital Outlay Bonds Article XII, § 9 (d)
Right-of-Way and Bridge Bonds Article VII, § 17
Florida Forever and Everglades Bonds Article VII, § 11 (e)
County Road Bonds Article XII, § 9 (c)
Housing Bonds Article VII, § 16
Pollution Control Bonds Article VII, § 14
Scholarship Loan Bonds Article VII, § 15
Bond Program Constitutional Authority
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Types of Debt
• General Obligation or Full Faith and Credit Bonds (Constitutionally authorized)
Examples: Public Education Capital Outlay (PECO)
Right-of-Way Acquisition and Bridge Construction (ROW)
• Bonds secured by specified taxes(Constitutionally authorized) -- Article VII '11(e)
Example: Preservation 2000/Florida Forever
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Types of Debt – continued
• Revenue Bonds secured by non-tax revenues -- Article VII '11(d)Examples: Turnpike Bonds
Lottery BondsUniversity Auxiliary Facilities (Dormitories and Parking Facilities)
• Bonds subject to annual appropriation of debt service or Certificates of Participation (COPs)Examples: Facilities Pool
Prison Bonds
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Limitations on Debt
• Limits on debt imposed in various ways
(1) Constitutional limits on individual programsExample: PECO – no more than 90% of gross receipts taxes for debt service – Article XII '9(a)(2)
(2) Statutory limitsExamples:Preservation 2000/Florida Forever – no more than $30 million in debt service in each year additional debt is authorized;
Right-of-Way – no more than 7% of STTF revenues for debt service
(3) Bond documentsExample: Limited by enterprise revenues pledged plus additional bonds test
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Authorization of Debt
• Legislature authorizes debt through substantive law or appropriations act
– Legislature decides what to borrow for and how much
to borrow
– Executive Branch implements legislative authorization
through Division of Bond Finance (DBF)
– Governor and Cabinet are governing board of DBF
– DBF performs centralized debt management function
for State and oversees structuring and execution of
most State debt issuance
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Debt Management Principles
• Chapter 215.98, F.S., requires annual analysis of State’s debt position through debt affordability analysis
• Debt affordability analysis prepared annually for legislative leadership
• Debt affordability analysis designates benchmark debt ratio and establishes a target and cap
• Benchmark debt ratio is annual debt service to revenues available to pay– Target 6%– Cap 7%
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Debt Management Principles – cont.
• Debt affordability analysis provides framework for State to measure, monitor and manage State’s debt position
• Debt affordability analysis assists the legislature in prioritizing capital spending and integrates debt authorization function (legislative branch) with debt management function (executive branch)
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State Debt OutstandingTotal Debt Outstanding: $23.0 billion
Debt Type AmountNet Tax-Supported Debt 17,865.5$
Self-Supporting Debt 5,159.9$
Total State Debt Outstanding 23,025.4$
Debt Outstanding by Type as of June 30, 2006(In M illions of Dollars)
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Debt Outstanding by Program
EducationPublic Education Capital Outlay 8,840.2$ Capital Outlay 823.4 Lottery 2,148.9 University System Improvement 229.4
Total Education 12,042.0$ Environmental
Preservation 2000 / Florida Forever 2,533.7 Everglades Revenue Bonds 98.4 Conservation and Recreation 15.1 Save Our Coast 75.7
Total Environmental 2,723.0 Transportation
Right-of-Way and Bridge Acquisition 1,665.6 State Infrastructure Bank 21.6 Florida Ports 317.2
Total Transportation 2,004.4 Appropriated Debt / Other
Facilities 328.4 Master Lease 17.4 FLAIR Lease 48.6 Prisons 298.0 DMS Aircraft Lease 4.7 Juvenile Justice 16.7 Children & Families 70.3 Radio Tower Lease - Affordable Housing 264.4 Florida High Charter School 21.2 Lee Moffitt Cancer Center 26.4
Total Appropriated Debt 1,096.2
Total Debt Outstanding 17,865.5$
Dollar Amount
Net Tax Supported Debt By ProgramAs of June 30, 2006
(In Million s of Dollars)
EducationUniversity Auxiliary Facility Revenue Bonds 636.6$
EnvironmentalFlorida Water Pollution Control 116.5 Pollution Control 0.0
TransportationToll Facilities 2,414.3$ Orlando-Orange Co. Expressway Authority 1,811.1 Road and Bridge 140.6 State Infrastructure Bank Revenue Bonds 40.7
Total Transportation 4,406.7
Total Debt Outstanding 5,159.9$
Dollar Amount
Bonds Outstanding By ProgramSelf Supporting DebtAs of June 30, 2006
(In Millions of Dollars)
Debt Type Amount
Net Tax-Supported Debt 17,865.5$
Self Supporting Debt 5,159.9$
Total State Debt Outstanding 23,025.4$
State of FloridaDebt Outstanding by Type and Program
As of June 30, 2006(In Millions of Dollars)
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Total Debt Outstanding Fiscal Years 1996 through 2005
(In Billions of Dollars)
$-
$5.0
$10.0
$15.0
$20.0
$25.0
Debt Outstanding $12.3 $13.2 $15.4 $16.8 $18.0 $18.3 $19.2 $20.4 $21.2 $22.5 $23.0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Growth in Debt Outstanding
• Total debt increased $10.7 billion, from $12.3 billion to $23.0 billion over the last ten years
• Debt per capita has also increased from $634 to $979 over the last ten years
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Growth in Annual Debt Service
• Annual debt service payments total approximately $1.7 billion annually
• Increased debt service reduces future budgetary flexibility
• Annual debt service requirements have more than doubled over the last ten years
Net Tax-Supported Debt Service Fiscal Years 1996 through 2006
(In Millions of Dollars)
$-
$200.0
$400.0
$600.0
$800.0
$1,000.0
$1,200.0
$1,400.0
$1,600.0
$1,800.0
Debt Service $741.6 $801.4 $928.1 $1,071 $1,166 $1,303 $1,357 $1,459 $1,551 $1,584 $1,680
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
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Growth in Benchmark Debt RatioDebt Service as a Percentage of Revenue
3.50%
4.00%
4.50%
5.00%
5.50%
6.00%
6.50%
7.00%
7.50%
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
7% Cap 6% Target Historical Ratios
Ratio of Debt Service to RevenueFiscal Year
Benchmark Ratio
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
4.28% 4.61% 5.09% 5.23% 5.70% 5.82% 6.12% 5.94% 5.36% 5.10%
• Benchmark debt ratio exceeded 6% target in 2003 due to changes in revenues available caused by the 2001-2003 economic recession
• Benchmark debt ratio has improved over the last three years14