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Arizona could run out of money to pay its bills as early as next month, state Treasurer Dean Martin says.
And unlike last spring, when the treasurer issued a similar alarm, this time there won't be reserves to cover the bills. Martin says the state will be forced to borrow money in the short term - the first time since World War II - and adds that there is
little that lawmakers can do to avert it.
"No matter what they do with the budget, we'll be negative in March or April," Martin said.
He has shared his sober analysis with the incoming legislative leaders, as well as Jan Brewer's gubernatorial transition team.
"Essentially, the state is broke," said House Speaker-elect Kirk Adams, R-Mesa.
Adams said he's not sure he agrees with Martin's belief 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, he added, "there's only so much you can do in the next few weeks."
"You have to be able to meet payroll, and you have to keep the lights on," Adams said.
Lawmakers begin their regular legislative session Jan. 12 and are expected to get to work immediately on a budget solution.
The state's $9.9 billion budget is at least $1.2 billion out of balance. Spending has continued while revenues from sales and income taxes have fallen far short of projections. The state Constitution requires a balanced budget by the time the fiscal year ends June 30.
An analysis by the treasurer's staff shows that the state's fund balance could dip to negative $50 million on Feb. 23 at the earliest and mid-March under a more optimistic scenario. That could force the state to borrow at least that much, if not far more. The deficit would trigger the first borrowing the state has done to cover daily bills since the state's tax structure was revamped around World War II to rely on sales and income taxes, instead of property taxes alone.
In addition, the action will likely hurt the state's bond rating, as lenders don't look kindly on borrowers who have no cash.
Brewer, who is expected to become governor once Gov. Janet Napolitano is confirmed as the nation's next Homeland Security chief, is aware of the situation and is monitoring it, said Doug Cole, a spokesman for Brewer's transition team. He did not comment further.
Adams said the news underscores the severity of the state's budget woes and highlights what he calls the "mismanagement" of the past two state budgets. Although Republicans controlled the Legislature for both budget seasons, the deals were brokered by Democrat Napolitano, legislative Democrats and a handful of Republicans.
"We spent far more than we had money for," said Adams, who voted against the budgets.
If the state's checkbook runs dry in February, Martin said he could tap the $130 million remaining in the rainy-day fund to cover bills. But that would leave no reserve fund for lawmakers, and it wouldn't cover the $600 million payment that must be made to the state's public schools in March.
State law requires that the state use all available money before the treasurer can begin to seek loans.
And unlike last spring, when the treasurer issued a similar alarm, this time there won't be reserves to cover the bills. Martin says the state will be forced to borrow money in the short term - the first time since World War II - and adds that there is
little that lawmakers can do to avert it.
"No matter what they do with the budget, we'll be negative in March or April," Martin said.
He has shared his sober analysis with the incoming legislative leaders, as well as Jan Brewer's gubernatorial transition team.
"Essentially, the state is broke," said House Speaker-elect Kirk Adams, R-Mesa.
Adams said he's not sure he agrees with Martin's belief 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, he added, "there's only so much you can do in the next few weeks."
"You have to be able to meet payroll, and you have to keep the lights on," Adams said.
Lawmakers begin their regular legislative session Jan. 12 and are expected to get to work immediately on a budget solution.
The state's $9.9 billion budget is at least $1.2 billion out of balance. Spending has continued while revenues from sales and income taxes have fallen far short of projections. The state Constitution requires a balanced budget by the time the fiscal year ends June 30.
An analysis by the treasurer's staff shows that the state's fund balance could dip to negative $50 million on Feb. 23 at the earliest and mid-March under a more optimistic scenario. That could force the state to borrow at least that much, if not far more. The deficit would trigger the first borrowing the state has done to cover daily bills since the state's tax structure was revamped around World War II to rely on sales and income taxes, instead of property taxes alone.
In addition, the action will likely hurt the state's bond rating, as lenders don't look kindly on borrowers who have no cash.
Brewer, who is expected to become governor once Gov. Janet Napolitano is confirmed as the nation's next Homeland Security chief, is aware of the situation and is monitoring it, said Doug Cole, a spokesman for Brewer's transition team. He did not comment further.
Adams said the news underscores the severity of the state's budget woes and highlights what he calls the "mismanagement" of the past two state budgets. Although Republicans controlled the Legislature for both budget seasons, the deals were brokered by Democrat Napolitano, legislative Democrats and a handful of Republicans.
"We spent far more than we had money for," said Adams, who voted against the budgets.
If the state's checkbook runs dry in February, Martin said he could tap the $130 million remaining in the rainy-day fund to cover bills. But that would leave no reserve fund for lawmakers, and it wouldn't cover the $600 million payment that must be made to the state's public schools in March.
State law requires that the state use all available money before the treasurer can begin to seek loans.
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