Arizona State Treasurer Dean Martin Says State Spending Exceeds External Limit

PHOENIX – Treasurer Dean Martin announced Wednesday the State’s spending has exceeded the $700 million credit limit from outside lender Bank of America just days after it was issued. The operational costs have further forced the Treasurer to issue additional Treasurer Warrant Notes of $73 million from internal sources above the $700 million recently established external facility. This was required in order to make the Arizona schools payment on December 1st.

“Government spending in Arizona is out of control. We are more than three-quarters of $1 billion in the red for daily operations,” said Treasurer Dean Martin. “As we predicted in our forecasts, just one week after setting up essentially the largest line of credit in state history, the State of Arizona has maxed it out. The Governor and Legislature need to reign in excessive spending; we can no longer afford to continue spending more than we make.”

Treasurer Martin noted that the $773 million negative operating balance does not include the estimated $1.6 billion the State General Fund previously used from other dedicated operating funds, which puts the current total General Fund cash deficit at about $2.4 billion.

“Yesterday’s $773 million in borrowing is the cumulative effect of the Executive and Legislature ignoring our warnings since March 2007 of the state’s dire fiscal position,” said Treasurer Dean Martin.
On November 19, 2009, the State Loan Commission approved an agreement with Bank of America to tap what is similar to an outside line of credit not to exceed $700 million in daily borrowing. The State’s total payment to schools was $389 million on Tuesday, requiring the State to borrow from internal sources again since outstanding borrowing from the day before totaled more than $412 million.

Treasurer Martin continued, “We have been able to ‘keep the lights on’ through these measures, and make sure paychecks and payments do not bounce. However, this is a limited resource, and must be paid back by the end of the fiscal year. This gives the Governor and Legislature a little time to fix the problems. However, Arizona taxpayer pocketbooks are empty. The state’s bank account is dry. We need a responsible and balanced state budget right now. Every delay costs taxpayers.”

Information from: aztreasury.gov, http://aztreasury.gov/media/2009/KVOA-12-02-09.html