Florida uses new debt reduction program to retire $400 million

The state of Florida has paid down $400 million of the state's liabilities through its new Debt Reduction Program, Gov. Ron DeSantis said Wednesday, saying the move saved taxpayers millions of dollars.

In June, DeSantis signed the $116.5 billion budget for fiscal 2023–24, which established the debt reduction program within the Division of Bond Finance. The program was designed to cut state debt by accelerating the payoff of bonds prior to their maturity to eliminate future interest costs.

"We put Floridians front and center in every decision we make and are proud to continue saving them money through smart fiscal policy," DeSantis said.

Florida has now paid down roughly $5 billion in state debt since DeSantis took office in 2019. Additional paydowns are expected during the current fiscal year.

"Gov. DeSantis championed the debt reduction program through the legislative process," said Ben Watkins, the division of bond finance director. "The division is proud to have delivered on his vision, resulting in an expedited reduction in state debt at a savings to taxpayers."

The bond division completed two transactions last week to support the retirement of outstanding taxable public education capital outlay (PECO) bonds and state revolving fund (SRF) bonds.

The transactions were done using the $200 million in state appropriated funds, along with some additional available money, to pay down $400 million in state debt prior to maturity, generating nearly $34 million in savings for taxpayers.

The budget passed by the Legislature last month didn't include some provisions that would have accelerated the state's efforts to shrink its debt portfolio even further.

Lawmakers had considered a plan that provided for the early retirement of some state debt and would have created a state investment fund and debt-reduction program. About $200 million was included in the plan to reduce outstanding debt, half of what the governor wanted.

Florida's general obligation bonds are gilt-edged, holding triple-A ratings from Moody's Investors Service, S&P Global Ratings and Fitch Ratings.

"I look forward to working with the governor to explore additional opportunities to leverage Florida's solid financial footing and further reduce the state's financial obligations," Watkins said.