Florida's Credit Rating Unscathed After Hurricane Irma, Moody's Reports
Hurricane Irma pounded Florida last year, but the state’s credit rating — Aa1/stable — was unscathed, Moody’s Investor Services reported Feb. 8.
Moody’s, an agency that rates bonds, said that Florida and Texas have “growing and increasingly diverse economies that have usually bounced back quickly after storm events,” according to The Real Deal.
Florida’s gross domestic product was $955.6B, according to a report last year from the U.S. Bureau of Economic Analysis. Seventy-seven percent of that GDP is concentrated in coastal counties, which are especially vulnerable to flooding, coastal storm surges and wind damage.
But even if there are temporary slowdowns in collections of tax revenue after hurricanes, the state has enough cash reserves to cover delays, Moody’s wrote. Whereas most states keep 4.9% of tax revenues in reserves, Florida keeps 11.3%.
Furthermore, the National Flood Insurance Program, which insures about 5.1 million homeowners, helps cover losses. Moody’s did warn, though, that the program is perpetually broke and vulnerable to cutbacks in Congress.
As Forbes reported last fall based on input from Moody’s, natural disasters have never been the cause of a default in U.S. municipal bond history. Even after Hurricane Katrina, which caused $120B in damages, New Orleans was able to pay its debt obligations.