Fitch Rates $200MM Florida Full Faith & Credit Right-of-Way Bonds 'AA+'; Outlook Negative

NEW YORK--(Business Wire)--
Fitch Ratings assigns an 'AA+' rating to Florida's approximately $200 million
full faith and credit department of transportation right-of-way acquisition and
bridge construction bonds, series 2009A, for bid on 18-hours notice as soon as
July 13, 2009. In addition, Fitch has affirmed the rating of approximately $13
billion outstanding Florida full faith and credit bonds at 'AA+'. The Rating
Outlook is Negative.

Florida's 'AA+' general obligation rating continues to recognize the state's
moderate debt burden, strong financial management practices, well funded pension
systems, solid long-term economic prospects, and still significant reserves,
including various trust funds. The Negative Outlook reflects the severity of the
state's continued economic and revenue decline as well as the significant
uncertainty associated with the economic and revenue outlook. The state's fiscal
2010 budget maintained substantial reserves, providing cushion for revenue
underperformance; however, meaningful economic and revenue deterioration beyond
what is assumed in current state forecasts could result in negative rating
action.

Florida's weakened economy has led to precipitous revenue losses, with the
state's revenue sources (primarily a sales tax, but also a documentary stamp tax
in large part based on real estate transactions) proving especially susceptible
to the decline in housing market activity; the state has no personal income tax.
General revenues are expected to plummet 13.1% in fiscal 2009 and drop another
4.5% in fiscal 2010, based on the March 2009 state forecast, following
year-over-year declines of 2.5% in fiscal 2007 and 8.7% in fiscal 2008. The
state will review the current economic forecast later this month and the revenue
forecast in August. The legislature has consistently and promptly addressed
numerous large negative revenue estimate revisions, maintaining budget balance
and an adequate reserve position.

The fiscal 2009 budget reduced general fund spending by 7.5% from fiscal 2008
levels, with primary and secondary education funding receiving a sizable
reduction. Additional austere budgetary measures followed significant negative
estimate revisions over the course of the year. Based on the March 2009 revenue
forecast, fiscal 2009 is projected to close with total reserves of almost $2.2
billion, more than 10% of general fund revenues. Revenues were slightly ahead of
estimates through May 2009.

A budget gap of almost $6 billion for the fiscal 2010 budget was closed
primarily through the use of federal stimulus monies ($2.5 billion), fee and tax
increases ($1.9 billion, including about $850 million from a $1/pack cigarette
tax increase), use of trust fund balances ($582 million), and some spending
reductions. Including about $300 million from a yet-to-be-finalized tribal
gaming compact, the budget incorporates an unencumbered ending general fund
balance of $1 billion. Total reserves at fiscal 2010 year-end are projected at
$2.5 billion, almost 13% of revenues. Although reserves are sharply reduced from
the peak of $9.9 billion in fiscal 2006, maintenance of this reserve position in
such a strained financial environment is notable and a key credit strength.

Florida's poor economic performance, one of the most negative of the states,
reflects the state's severe housing market correction. State employment was down
3.2% in 2008, compared to a 0.4% loss for the nation, and the nonfarm employment
decline of 5.5% in May 2009, compared to May 2008, reflected a drop of 17.7% in
construction employment and declines in all sectors but education and health
services. The state's unemployment rate rose to 10.2% in May 2009, 109% of the
U.S. rate and up from 5.8% in May 2008. The March 2009 state forecast projects
nonfarm employment down 4% in fiscal 2009 and another 3.5% in fiscal 2010;
unemployment is expected to peak at 10% in fiscal 2010. Personal income
performance has been weak, growing just 62% of the U.S. rate at 2.4% in 2008 and
down 1.2% year-over-year in the first quarter of 2009. The state forecasts
personal income up just 0.5% in fiscal 2009, then declining 0.4% in fiscal 2010.

Debt represents a moderate burden on Florida's resources. Net tax-supported debt
of about $20.3 billion is a moderate 2.8% of personal income. Debt is two-thirds
full faith and credit general obligations. Pensions are among the most well
funded of all the states.

Florida's full faith and credit bonds are secured by specific revenues. The
right-of-way acquisition and bridge construction trust fund bonds are payable
primarily from pledged motor and diesel fuel taxes that are transferred from the
state transportation trust fund to the right-of-way acquisition and bridge
construction trust fund.

The bonds mature July 1, 2010-2039 and are callable beginning July 1, 2019 at
101%.

Fitch's rating definitions and the terms of use of such ratings are available on
the agency's public site, 'www.fitchratings.com'. Published ratings, criteria
and methodologies are available from this site, at all times. Fitch's code of
conduct, confidentiality, conflicts of interest, affiliate firewall, compliance
and other relevant policies and procedures are also available from the 'Code of
Conduct' section of this site.

Fitch Ratings, New York
Laura Porter, +1-212-908-0575
Richard Raphael, +1-212-908-0506
Media Relations, New York:
Cindy Stoller, +1-212-908-0526
cindy.stoller@fitchratings.com

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