PHOENIX (AP) — Arizona could run out of money to pay its bills as early as next month and may have to borrow money in the short term for the first time since World War II, state Treasurer Dean Martin said.
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“No matter what (lawmakers) do with the budget, we’ll be negative in March or April,” Martin said.
With no reserves to cover the bills, that could force the state to borrow at least that much, if not far more.
“Essentially, the state is broke,” said House Speaker-elect Kirk Adams, R-Mesa.
He said he’s not sure that he agrees with Martin that there is no way to avoid borrowing, saying lawmakers are hoping to rein in the state’s $1.2 billion budget deficit through spending cuts.
But, “there’s only so much you can do in the next few weeks,” he said. “You have to be able to meet payroll, and you have to keep the lights on.”
Lawmakers begin their regular legislative session Jan. 12 and are expected to immediately work on the state’s $9.9 billion budget.
The state Constitution requires a balanced budget by the time the fiscal year ends June 30.
If the state borrows money to pay daily bills, that would be the first such borrowing the state has done since the state’s tax structure was revamped around World War II to rely on sales and income taxes, instead of property taxes alone.
The state would seek loans not exceeding three months from banks.
Loans would only add to budget problems down the road, as the money would have to be paid back with interest. The action also will likely hurt the state’s bond rating, as lenders don’t look kindly on borrowers who have no cash.
Martin has shared the bad news with incoming legislative leaders and Jan Brewer’s gubernatorial transition team.
Martin said the only chance of dodging the borrowing bullet would be if the federal government enacted a stimulus program that would send aid to state and local governments. But Martin said if that aid comes in the form currently being planned — grants for specific projects — it wouldn’t help the state’s bottom line.
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