Jan 22 (Reuters) - A court decision upholding pension reforms for Florida government workers are a credit positive for the state’s finances, as well as for local governments in the state, credit agencies said on Tuesday.
Florida’s Supreme Court last Thursday overturned a lower court ruling voiding a 2011 law requiring a 3 percent employee contribution and other state pension changes that have saved Florida governments hundreds of millions of dollars.
Moody’s Investors Service and Fitch Ratings on Tuesday said the ruling was a boon to government finances. Standard & Poor’s Rating Service on Friday called the decision a credit positive for Florida.
“The decision means the state will not have to reimburse an estimated $530 million that employees contributed to the plan in fiscal 2012. Pension costs for local governments were also reduced by an aggregate $712 million in fiscal 2012 as a result of the changes,” Moody’s said.
Moody’s estimated that Florida would have faced a $2 billion budget gap in fiscal year 2014 if the state’s top court had ruled against it. Unions and other opponents of the 2011 law have until Friday to seek a rehearing of the case.
“The decision, if finalized, ensures that state and local governments will continue to benefit from pension reform with lower pension costs and a greater degree of financial flexibility,” Fitch said.