"In the four years before I became governor, we increased state debt $5.2 billion. We've paid it down $2 billion."
Rick Scott on Friday, December 14th, 2012 in a TV interview
Rick Scott says debt was up $5.2B under Charlie Crist, down $2B under Scott
Gov. Rick Scott is decking Charlie Crist on Florida’s debt.
Speculation abounds that Crist, who recently became a Democrat but was a Republican when he served as governor, will challenge Scott’s 2014 re-election bid.
"In the four years before I became governor, we increased state debt $5.2 billion. We've paid it down $2 billion," Scott said in response to a question about possibly running against Crist during a December interview with CBS-4 Miami. "That’s going to cost you money down the road, so we’re doing the right thing."
Scott’s talking point on the debt is part of a broader strategy to contrast the dour economy Florida experienced during the Crist years with the state’s turnaround since 2011.
PolitiFact Florida wanted to check Scott’s arithmetic and evaluate the point he’s trying to make about each leader’s influence on the debt.
It’s going to be fun -- don’t reach for your Facebook tab!
We hear a lot about the perils of the $16.4 trillion national debt, accumulated over years of the federal government borrowing money to pay for the cost of running the country.
State debt is a very different animal.
Unlike the federal government, Florida is bound by law to balance its budget every year. However, the state is allowed to borrow money to pay for capital improvement projects, such as university buildings, roads and environmental preservation.
There are a few different ways to talk about state debt. There’s the overall total for outstanding debt, which was $26.2 billion as of June 30, 2012.
But within that are two categories. The largest chunk ($21.6 billion in 2012) is called "net-tax supported debt," which is accrued when the state issues bonds to raise money for spending projects. The smaller part ($4.6 billion in 2012) is "self-supporting debt," which is accrued by bonds that come with a revenue source, such as toll roads and dorm construction.
This is our second check on Scott and the state debt. In 2011, we rated his claim that Florida’s debt was $23 million as True, even though he was referring to net tax-supported debt and not total debt. Experts told us then it was okay for him to use that figure.
This time, Scott appears to be referring to the total outstanding debt.
Whose debt is it anyway?
Just as there are different ways to count the debt, there are different ways to assign responsibility for it.
We can figure out how much debt Florida accumulated during the Crist years by looking through the archives of the Division of Bond Finance, which publishes an annual report on the debt picture. Scott's press office directed us to the division's most recent Debt Affordability Report.
Using that, we created a chart to show the total outstanding debt (in billions of dollars) over recent fiscal years.
|FY 2006||FY 2007||FY 2008||FY 2009||FY 2010||FY 2011||FY 2012|
But some experts told us the better way to compare debt between governors is by examining the budgets over which the governor actually had control to veto spending.
Crist was elected in 2006 and took office in January 2007. That means the first budget he signed -- which included projects in need of bond financing -- covered the 2008 fiscal year, which ended June 30, 2008. The last budget Crist signed was for the 2011 fiscal year, which ended six months into Scott’s tenure.
So, to some experts, it’s more accurate to assess the growth of the debt under Crist from FY 2008 to FY 2011. This method produces an increase of $3.4 billion in debt, which is still large but not as big as the $5.2 billion that Scott claimed.
Scott gets the same treatment. He took office in January 2011, so the first budget he signed covered the budget year running July 1, 2011, to June 30, 2012. Under this measure, Scott reduced the debt only $1.5 billion.
All of that said, no one denies the total debt fell sharply with Scott, who is famously debt-averse. It’s short of his $2 billion talking point now, but it probably won’t be when we get an analysis of debt from the 2012-13 budget, said Kurt Wenner, Florida TaxWatch vice president of tax research.
"He’s only had one year that’s been reflected, but certainly I think we’ll find that last year was a relatively low bonding year as well," Wenner said.
We should note there’s still another way to analyze debt: debt actually issued by a governor. We won’t go through all the numbers here, because they’re yet again different from the numbers Scott used. But they do reflect the same trend of debt rising under Crist and dropping under Scott.
What was happening?
Even during the worst of Florida’s recession, Florida borrowed money for capital projects, all the while maintaining its credit ratings with various agencies.
"We’ve been very well managed financially even during the downturn," said Ben Watkins, executive director of the state’s Division of Bond Finance. "We’re very conservative."
The sharp decline in debt is due to the state’s discontinued borrowing for acquiring conservation land and the decline of the state’s largest borrowing program, called Public Education Capital Outlay, or PECO, for public school, college and university construction projects. The decades-old program is paid for by a tax on electric, gas and telecommunications services, a source that has shriveled over recent years as Floridians conserve energy and ditch landline phones.
In 2012, there was no PECO borrowing because of a serious drop-off in collections from the tax. Higher ed advocates said the PECO shortfall signaled a "crisis in infrastructure funding" that would limit the state’s ability to educate college students. At the University of South Florida, for example, a new learning center has gone unfinished as it awaits more PECO money.
In his first year, Scott vetoed $474 million in bonds, including dozens of improvement and construction projects at state colleges and universities. Scott lowered debt issuance to $416 million, its lowest level since 1990 and significantly less than the $2 billion yearly average for the previous decade.
Conversely, the rapid increase in debt after 2002 was driven mostly by the 2002 class-size amendment added to the Constitution by Florida voters that year. It required the Legislature to reduce class sizes by adding more classrooms. It cost the state $2.5 billion to build more class space, which included $1.9 billion in lottery revenue bonds, said David Jacobson, a spokesman for Moody’s Investors Service. That program is essentially over, he said, which contributes to the debt falling.
As education commissioner, Crist said he supported the goal of reducing class size but was concerned with costs.
Eric Draper, executive director of Audubon of Florida, said he hopes Scott allows the state to issue more debt for land conservation this year because it makes long-term sense.
"As you’re building houses, they need parks, clean water," he said. "Somebody’s got to pay to preserve the land where the water comes from."
So far, the Scott administration has tried to get rid of state land, with the Department of Environmental Protection at one time proposing to sell off $50 million worth of land.
"Under Gov. Crist, we didn’t see a proposal like that," Draper said. "(He) was a big supporter of the state’s land acquisition programs. Gov. Scott has been markedly less encouraging."
Experts in a Bloomberg story called Florida’s drastic debt reduction a "pretty rare achievement" that sets Florida apart from the five most populous states.
We give Scott some credit for his broader point about the debt’s steady rise under Crist and sharp decline under his tenure.
But the numbers he uses are not accurate if you consider the budget years over which Crist could have exerted any control.
Moreover, some bonds Florida issued were to pay for programs in the works before Crist took over, or the Legislature shares at least some of the blame for putting it in the budget.
Finally, there was a spike in the debt after 2002 that was driven by a constitutional amendment to limit class sizes. Voters approved that measure, and the state government was required to put it into action.
Overall, we rate this claim Half True.
Published: Wednesday, January 9th, 2013 at 7:18 p.m.
PolitiFact Florida, "Gov. Rick Scott says state debt is $23 billion," June 13, 2011
PolitiFact Florida, "Rick Scott says Florida’s economy soured under Charlie Crist," Dec. 14, 2011
PolitiFact, "Barack Obama says Massachusetts was No. 1 for state debt when Mitt Romney was governor," June 18, 2012
Division of Bond Finance, 2012 debt affordability presentationand report
Interview with Ben Watkins, director of the Division of Bond Finance of the Florida State Board of Administration, Dec. 21, 2012
Florida Board of Governors, Facilities Task Force report, Nov. 7, 2012
Sarasota Herald-Tribune, "State’s debt declining rapidly," Dec. 12, 2012
CBS Miami, "Gov. Rick Scott on CBS4 News This Morning," Dec. 14, 2012
Florida Times-Union PolitiJax, "Florida’s state debt has dropped $2 billion since 2010," Dec. 11, 2012
Miami Herald, "Fewer dollars flowing into statewide school repairs fund," Feb. 9, 2012 (accessed via Nexis)
Tampa Bay Times, "Schools, colleges are growing, but state construction money has dried," Jan. 22, 2012
Email interview with David Jacobson, public finance communications strategist for Moody’s Investors Service, Dec. 13, 2012
Bloomberg, "Florida Debt Shrinking Most in Decades Fuels Rally," Dec. 3, 2012
Interview with Kurt Wenner, Florida TaxWatch vice president of tax research, Jan. 7, 2012
Interview with Amy Baker, executive director of the Legislature's Office of Economic and Demographic Research, Jan. 7, 2012
Florida Legislature Office of Economic and Demographic Research, "State of Florida Long-range Financial Outlook FY 2013-14 through 2015-2016," fall 2012
Interview with Eric Draper, Florida Audubon Society executive director, Jan. 8, 2012
St. Petersburg Times, "Class size issue closer to ballot," April 26, 2002
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