Florida may have one of the lowest debt-per-capita ratio in the nation, but unless lawmakers rein in the debt, Floridians could face serious consequences, a report says.
The report, released by State Budget Solutions, a Virginia-based organization focused on budget reform, said the report states the state's debt — made up primarily of unfunded pension liabilities — breaks down to about $7,079 per person.
"State debt directly affects Floridians in that it represents money their state government has promised to pay," said Cory Eucalitto, a researcher at State Budget Solutions. "Ultimately, those dollars have to come out of the pockets of taxpayers."
The study looks at several aspects of the state's financial obligation. The calculation includes unfunded public pension liabilities, traditionally issues debt like bonds and unemployment trust fund loans.
All told, the study found the total state debt is more than $134 billion, and unfunded pension liabilities make up the largest piece of the equation.
Florida's retirement system is split into two parts: a defined contribution, or a 401(k)-like retirement plan, or a defined benefit, or traditional pension plan. That plan is about 87 percent funded.
That means the state doesn't have enough money on hand to cover the entire cost of the plan, and state officials have said if the plan isn't fully funded, the Legislature could reduce future benefits to lower the cost or increase member contributions to boost funding.
The state has made several attempts at pension reform to lessen its obligation, and local legislators said recently pension reform will be something they'll continue to review.
"I think it is smart to continue to be focused on (how we are) managing and projecting pensions properly," said state Sen. Garrett Richter, R-Naples.
Richter said while he has not seen the State Budget Solutions report, he thinks the fact it made the lowest per capita debt list shows the state has been moving in the right direction in recent years.
"That's a good sign," he said. "I would say it's a product of being fiscally conservative."
Bob Lee, the executive director of the Center for Florida Local Government Excellence, said while the ranking is a good benchmark, there's not enough information provided to say whether the per capita rate reflects the state's total debt.
"I think there's a lot more variables to be looked at to assess ... how meaningful it is," he said. "But the reality is, any type of benchmarks are useful information."
Eucalitto said Floridians should encourage their lawmakers to "be responsible stewards of the state's finances." While not all encompassing, Eucalitto said the study should point out to Floridians that without reform Floridians may have to face "tough consequences" to get out of debt.
"The lesson here needs to be 'when you are in a hole, stop digging,'" he said. "Lawmakers should avoid the temptation to fund current expenditures. This irresponsibility puts future state budgets at risk."