MIAMI Florida Governor Rick Scott's budget proposals calling for sweeping corporate and property tax cuts are a credit negative for school districts in the fourth most populous U.S. state, Moody's Investors Service said on Thursday.
"The plan incorporates expenditure savings in most of the state's major policy areas, but school districts statewide would feel the largest burden because of local property tax reductions and the loss of federal stimulus education funds," Moody's said in a written comment.
Scott, a Republican and former healthcare executive elected with Tea Party support in November, has proposed large spending cuts as well as tax cuts. Florida, an epicenter of the U.S. housing crisis with an 11.9 percent jobless rate, faces a $3.6 billion revenue shortfall in its next fiscal year.
"As proposed, the budget will likely require personnel reductions and seriously impede the ability of school districts to meet state-mandated class size reduction," Moody's said, noting Florida already has one of the country's lowest corporate tax rates.
Scott, responding to Moody's analysis, told reporters in Tallahassee that his policies would benefit Florida.
"I'm very comfortable that the things we are doing are things that will make this state a long term success," Scott said. "If you look at my business history, I've tried to put the companies I've been involved with in better financial shape. I'm trying to do the same thing for the state."
(Reporting by Michael Connor; additional reporting by Michael Peltier in Tallahassee, Editing by Chizu Nomiyama)