Florida Gov. Rick Scott on Tuesday defended legislative actions that prompted a leading rating agency to downgrade the credit rating of the South Florida Water Management District, which oversees billions in debt for a host of issues from flood protection to Everglades restoration.
Following on the heels of its decision to downgrade its debt rating on the U.S. government from AAA to AA+, Standard & Poor's last week did the same for the water management district.
The rating agency cited legislation passed earlier this year that reduces the district's tax base by about $120 million a year by limiting the amount of property taxes the district can levy.
Statewide, the legislation (SB 2142) trimmed $210 million from the budgets of five water management districts.
"The downgrade reflects legislative changes that we believe have significantly reduced the district's financial flexibility," said S&P credit analyst John Sugden-Castillo in a statement.
Pushed by Scott, who campaigned on reducing taxes, lawmakers approved the measure requiring the districts to submit their budget requests to the governor, who would submit the proposals as part of his budget request. The Legislature, however, would ultimately decide funding levels. The plan reduced the South Florida district's taxing authority by 30 percent.
In contrast to his response to the U.S. downgrade, Scott said S&P's ruling was a good thing for the district, which in such financially tough times should not be increasing its own debt.
"I think we absolutely did the right thing," Scott said of the legislation reining in the water districts. "We're making sure that all of the water management districts go back to their core missions. That was $210 million that will go back to taxpayers."
Water management officials said the news was "not unexpected" given the financial conditions in the state and across the country. They also said they plan to live within their means.
"The District has no plans to issue further debt in the foreseeable future and continues to place its credit worthiness and payment of existing debt as one of the agencys highest priorities, district spokesman Randy Smith said in a statement.
Despite passing 38-1 in the Senate and 83-34 in the House, some lawmakers questioned the wisdom of reducing the district's tax base, saying the South Florida region has already suffered from lower property values. Further cuts could make it difficult for the district to pay for its most basic duties of flood prevention and water retention.
Despite the downgrade, S&P said the district's financial house was largely in order and would remain so unless it went on a bonding spree in the near future.
"While revenue flexibility has been greatly diminished, the district's low leverage makes this portion of the budget affordable," the agency reported. "Should SFWMD issue additional debt, absent a significant increase in revenues authorized by the governor and Florida's Legislature, we could lower the ratings further."