PHOENIX — As lawmakers plan to return for another special budget session later this week, Arizona’s treasurer laid out the state’s dismal outlook in an economic briefing Tuesday afternoon.
“We are basically tapped out at this point,” Treasurer Dean Martin said.
About a dozen legislators attended the briefing as Martin reviewed the status of Arizona’s deficit and the “ramifications of the current cash flow crisis.”
“The state is literally broke,” Martin said.
Arizona could run out of available credit and cash as soon as January, when a $320 million K-12 school payment is due.
That news comes just weeks after the state was forced to take out a private bank loan to pay its bills for the first time since the Great Depression.
But for the current fiscal year, the state’s deficit is estimated at $1.6 billion.
Combine that with what remains of last year’s deficit and revenue losses, Martin said Arizona would need about $5 billion to break even.
That’s so deep, that state officials said even if Arizona fires every single state employee, it wouldn’t be enough to make up the difference.
“We are at our limit and have no place else to go,” he said.
The state is spending hundreds of millions more than it’s bringing in every month.
And as revenue collections continue to decline at an increasing rate, the deficit will likely grow, according to a recent report by state budget analysts.
“Given the on-going weakness in receipts … the shortfall estimates may rise again by January when revenue estimates are updated,” the report said.
The upcoming one-day special session is slotted for Thursday.
The session is the fifth one this year. It also comes just weeks after lawmakers last met, when they cut roughly $450 million from the state’s budget — most reductions coming from K-12 education and social services.
“We need to get our spending under control,” said Sen. Bob Burns, R-Peoria.
In this week’s session, lawmakers will aim to slice about $200 million from several state departments.
They will also attempt to approve a special election for two big-issue items: A sales tax increase and changes to voter-approved spending mandates.
The temporary sales-tax increase would be one cent per dollar, lasting three years. It’s estimated that would bring in an estimated $1 billion annually.
Because of state law, legislators can cut only from roughly 30 to 40 percent of the budget. By loosening spending mandates, it would allow leaders to spread cuts more evenly.
“We got to get beyond the one-time stuff,” Burns said. “And we need to get into making these adjustments permanent, or else we just aren’t going to be able to correct what’s in front of us.”
