When Florida Governor Rick Scott visited Miami last week, he touted his record of shrinking state debt the most in 30 years. Nearby Miami Dade College, the nation’s largest community college, prepared for another year with broken elevators and decaying buildings.
Florida won’t sell more Build America Bonds, the fastest-growing part of the $2.8 trillion municipal market, until the federal government guarantees the subsidy on the program, said Ben Watkins , who oversees the state’s debt sales.
Municipal borrowers in the U.S. face a “manageable” risk that they won’t get the full 35 percent interest-rate subsidy from the Build America Bond program, said John Cross, associate tax legislative counsel for the U.S. Treasury.
The Internal Revenue Service and U.S. Securities and Exchange Commission are using concern that Build America Bonds are being mispriced as an opportunity to impose restrictions on municipal borrowers, a panel of public issuers said at a conference this weekend.
Florida is selling $46.9 million in debt as soon as this week to help finance a $939 million project to replace septic tanks and cesspits polluting the turquoise waters of the Keys, home of the nation’s only living coral barrier reef.