Dean Martin – Culture of Government

Join thousands of supporters and change the culture of government. 
Click on the Volunteer tab on the top of the page to support our campaign.

Treasurer Dean Martin to Brief Lawmakers On State’s Economic ‘Crisis’

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.”

State of Our State: Q&A with state Treasurer Dean Martin

What happens if Arizona runs out of money?

That and other questions were posed to state Treasurer Dean Martin (pictured) by Kristin Borns and Joseph Garcia of Morrison Institute for Public Policy as part of the State of Our State yearlong project.

“Actually, the state has run out of money,” said Martin, who noted that Arizona went into the red for the first time since the Great Depression last fiscal year – April 2009, to be precise.

What’s being done to deal with Arizona’s fiscal crisis? What else can be done? What can we expect as Arizona weathers its worst financial storm in history?

Hear for yourself with these Audio Answers.

* What does the state Treasurer’s Office do? (01:59)
* What does it do differently during a crisis? (01:44)
* What if the state runs out of cash? (03:57)
* Can’t the state defer payments? (03:04)
* What the $1.2 billion loan capability mean? (07:13)
* Can Arizona declare bankruptcy? (03:54)
* What effect would a new sales tax have? (09:22)
* What’s better: sales tax or property tax? (07:37)
* Are there any immediate solutions to crisis? (04:03)
* Is growth still our No. 1 economic driver? (03:25)
* Any advice to the Legislature or governor? (01:44)
* Why should the treasurer be elected? (04:21)
* How have cuts affected the Treasurer’s Office? (03:02)

Andrew Long ASU Morrison Institute for Public Policy

Arizona State Treasurer Dean Martin: State Investments Safe

Other states have had runs of withdrawals from their public investment pools because of worries about their holdings in the mortgage industry but Arizona isn’t in the same boat, state Treasurer Dean Martin said Friday.

Florida suspended investment pool withdrawals because of a run by local governments spooked by downgrades of that state’s extensive mortgage-based holdings. Montana also had a run.

State investment pools are similar to private money-market funds. Cities, counties, school districts and other local entities invest money on a short-term basis in the funds and withdraw cash when needed to make payrolls and pay other operating costs.

Martin said Arizona reviewed its $12 billion state and local government investment pool when he took office in January and is sticking with a course of avoiding risky mortgage-related investments.

“My philosophy is safety first, then liquidity, then yield,” said Martin, a Republican and a former state senator.

Martin said the Treasurer’s Office invests in highly rated mortgage-related products but has never purchased any dependent on sub-prime mortgages for repayment.

In reviewing its mortgage investments, Arizona did find at least one that had a few mortgages that didn’t meet standards for higher-graded investment products, Martin said. Those short-term investments haven’t been renewed, he said.

Also, the Treasurer’s Office started reducing its mortgage-related investments in mid-2006 when Chief Investment Officer Tim White, whom Martin promoted to that position earlier this year, realized that the housing bubble was going to burst, Martin said.

Tom Bellshe, deputy director of the League of Arizona Cities and Towns, expressed confidence in the Arizona investment pool’s status.

“We won’t have the same kind of problems,” said Bellshe. “We feel good about the direction he’s taking us in.”

Arizona law requires the state to take a more conservative approach on investing than some other states and Martin has reviewed and tightened investment practices even further since he took office, Bellshe said.

Of the $12 billion in Arizona’s investment fund, $5.5 billion belongs to the state, $4 billion to local governments and $2.5 billion to the state land trust. Arizona’s public employees’ retirement system has a separate investment fund.

A Montana budget official told lawmakers in that state on Thursday that local governments and school districts this week pulled 27 percent of the $896 million that they had in the state’s short term investment pool.

Also Thursday, a Florida board chaired by Florida Gov. Charlie Christ suspended withdrawals to halt a run which saw local governments pull 40 percent of the assets from a state-operated investment pool.

“As you know, many of these investments are now non-performing and incurring losses for investors,” Martin said Friday in a letter to Arizona investors. “Because we avoided these products, we will not experience any losses associated with them.”

Since word of the two other state’s problems has come out, only two calls have come in from Arizona local government officials “who were just double-checking,” Martin said in an interview. “No panicked phone calls or anybody making major changes.”

By PAUL DAVENPORT, Associated Press Writer

Information from: http://www.aztreasury.gov/media/2007/BusinessWeek-11-07.html, Business Week

Arizona State Treasurer Dean Martin Announces Historic AAA Investment Rating by S&P

Press Release

(PHOENIX) – Standard and Poor’s Rating Services released its rating today for the Arizona State Treasurer’s state and local government diversified fixed income investments. S&P assigned its highest rating for stability ‘S1+’ and highest rating for credit quality of ‘AAAf’ (‘f’ designates this is a fund rating). This is the first time in state history that a state and local government investment pool has received a rating from S&P.

“This is a historic day for the state of Arizona. In the very first review, we received the highest possible rating,” said Treasurer Dean Martin.

S&P described the Treasurer’s Office investments in the $2.5 billion pool as “the pool’s holdings provide extremely strong protection against losses from credit defaults…” and the fund “…possesses an extremely low sensitivity to changing market conditions. S1+ rated funds typically exhibit a level of risk that is less than or equal to that of a portfolio comprised of the highest quality fixed-income instruments.”

It is important not to confuse this rating with the state’s debt rating, which is a rating of the overall fiscal health of the state’s budget, (which is currently lower). This rating by S&P evaluates the investments by the Treasurer’s Office of state and local government monies in the diversified fixed income pool (known as LGIP – Pool 5).

Treasurer Dean Martin stated, “This is quite an achievement, especially during these tough economic times and distressed financial markets, to achieve the highest rating possible for credit quality and stability. It validates all of the hard work that we at the Treasurer’s Office have put in to navigate these unprecedented financial markets.”

“My philosophy has always been safety and liquidity first, and this rating provides independent confirmation of that. One of my goals when I first became Treasurer was to make lasting improvements,” said Treasurer Dean Martin.

“Standard and Poor’s has recognized the improvements in operational oversight and risk management that we have made in my first two years in office, including a new risk management committee and the new electronic trading and compliance system. Future Treasurers will need to maintain these high standards in order to maintain our highest credit rating as Standard & Poor’s will continue to independently monitor and evaluate investments in the pool monthly.”

The AAAf rating is based on the high credit quality portfolio of more than 75% of the pool’s assets in AAA rated securities and the remaining balance in AA and A rated issuers. The S1+ rating is based on the high degree of safety and liquidity of pool holdings and a conservative stated weighted average maturity (WAM) maximum of 120 days.

Information from: http://www.aztreasury.gov/media/2008/InsideAZBusiness-11-08.html, Office of Arizona State Treasurer

“Mr. Martin Goes to Washington”

State Treasurer Dean Martin will testify Tuesday before a congressional committee on the importance of financial literacy and education.

“We need Congress to emphasize education, not just regulation,” said Martin, a Republican, in announcing his appearance before the House Committee on Financial Services.

Prior to being elected state treasurer in 2006, Martin served as a state senator. During that time, he helped establish legislation designating April as “financial education month.” He also has taught financial education courses and was a founding member of the Arizona chapter of Jump$tart, a national financial literacy organization.

- Matthew Benson

Information from: http://www.aztreasury.gov/media/2008/AZCentral-04-11-08.html, AZCentral.com

Arizona State Treasurer Dean Martin Gives Financial Tips From Football

The Super Bowl and the events leading up to it are the last places you’d expect to hear any sound financial advice.

The game itself is a competition in which multimillionaires smack one another on the field for 60 minutes in front of fans who forked over the equivalent of a car down payment for tickets.

Then there are the spectators at home.

They’re subjected to several hours of high-cost commercials designed to ply the cash from their wallets.

Who needs a $150 billion tax-rebate plan to stimulate the economy? Let’s just watch Super Bowl commercials once a month.

But on this fiscally uneven playing field, there was one pregame event designed to instill a sense of frugality.

Visa – yes, the credit-card company – sponsored a Phoenix news conference and demonstration touting its “financial football” software.

The program aims to teach teens and young adults a few key moves out of the personal-finance playbook, covering topics such as credit card, banking and budgeting basics.

Visa brought in 36 students from Alhambra High School in Phoenix, divided them into two teams and let them compete by answering questions from the software.

Larry Fitzgerald, wide receiver for the Arizona Cardinals, recounted how he’s been saving money ever since landing his first job as a Minnesota Vikings ballboy at age 16.

“You get that first taste of money and you want to spend it,” he told the students. “But my dad was on me to put some of it away – he instilled that in me at a young age.”

Adrian Peterson, rookie running back for the Minnesota Vikings, said he, too, places a high value on prudent money management.

“I’ve heard too many stories (of pro athletes blowing their riches),” Peterson said. “After a time, these guys don’t have anything to show for it.”

The Visa football game, which is rather clever, can be played for free at www. practicalmoneyskills.com.

Contestants move the chains and ultimately score points by answering multiple-choice personal-finance questions correctly.

Sample questions include:

• What type of organizations provides information on your past use of credit?
• What does APR stand for?
• What’s the purpose of using a PIN for a bank account?

“I had learned a lot of that already in an economics class,” said Melissa Tapia, an Alhambra senior, after playing the game. “But it’s good to review because you do use that stuff.”

Arizona Treasurer Dean Martin, who also spoke at the Visa event, said he hoped the software’s entertaining format would help teens remember key money lessons.

Fitzgerald’s father, also named Larry, wasn’t a formal participant at the Visa event but instead attended as a member of the news media.

He never played professional sports and has felt the sting of a job layoff, which perhaps explains why he appreciates the importance of saving.

“My mother taught me to save a quarter out of every dollar,” the elder Fitzgerald said. “It’s hard to do, and it takes a lot of discipline, but you’ve got to put some money away so you can survive those bumps and down periods.”

That’s sound advice, especially on Super Bowl Sunday.

Russ Wiles The Arizona Republic

Information from: http://www.aztreasury.gov/media/2008/AZRepublic-02-08.html, Arizona Republic

Treasurer Dean Martin, Larry Fitzgerald and Adrian Peterson Help Alhambra High School Students Sample ‘Financial Football’ Program

More than 25 students from Alhambra High School got a money management lesson Monday outside the classroom, with Arizona Cardinals All Pro wide receiver Larry Fitzergerald and Offensive Rookie of the Year Adrian Peterson playing teacher.

The duo, along with Arizona Treasurer Dean Martin and Visa Inc., kicked off Super Bowl week with a computer learning game for the lucky group.

The game, dubbed “Financial Football,” is being distributed Monday by Salt River Project to more than 600 high schools and junior high schools. The goal ofthe nationwide initiative, now in its 13th year, is to help students tackle their financial futures.

Fitzgerald and Peterson shared their personal experiences of making it big and maintaining their financial control after watching dozens of their peers in the National Football League squander their savings.

“You really have to know how to manage your money,” said Peterson, who still is adjusting to a mortgage and multiple car payments. The Minnesota Vikings running back just concluded his rookie campaign after playing three seasons with the University of Oklahoma.

Fitzgerald, who is in contract negotiations with the Cardinals, has made community involvement a priority since arriving in the desert.

“It’s important to reach out to youth. It’s important to create a good image for them, to be a role model,” he said.

He said his father was a frugal guy who stressed financial security, even during Fitzgerald’s first job as a ball boy for the Vikings. “You never know when your last play is going to be,” he said.

In a state suffering from poor student achievement, Martin said financial literacy is needed.

“Everyone is going to need to balance a checkbook. We need to help improve our curriculum and get this into the classroom,” he said.

The game was developed in cooperation with the NFL and Players Inc., a group of active and retired NFL players, along with Visa. The game is the centerpiece of a national financial education initiative that also includes a classroom curriculum. The game also can be downloaded free on cell phones.

Chris Casacchia The Business Journal

Information from: http://www.aztreasury.gov/media/2008/BizJournal_01-08.html, The Phoenix Business Journal

Treasurer Dean Martin: State Funds May Run Out Unless Legislature Takes Action

PHOENIX — Arizona’s cash to pay its bills will dry up sometime in late May without legislative action, state Treasurer Dean Martin warned Tuesday.

Martin said at the rate the dollars are going “out the door,” the entire $9.6 billion that legislative staffers predict the state will collect this fiscal year will be gone more than a month before it actually ends. That’s because state agencies were authorized to spend $10.6 billion under the assumption — now disproved — tax collections would reach that much.

He said if nothing changes, the state could end up issuing what essentially are bad checks for routine expenses, including payroll, as the state does not have what otherwise might be called “overdraft protection.”

“We don’t have any agreements with the local banks to say they’ll just kind of cover us for a few days or a week or whatever,” Martin said. “There’s no contract or anything,” he continued. “We couldn’t create one if we wanted to.”

Martin’s report comes as lawmakers began a week of all-day hearings to try to fix the mess — and do it before the cash runs out. The treasurer said at least some of the problem could be solved simply by giving him permission to spend more than the tax dollars he is collecting. That’s because the state does have extra cash, including close to $700 million in its “rainy day” fund and more than $100 million in various other special funds.

“But without a legislative budget bill being passed, we don’t have the authority to tap into that,” he said.

Both Gov. Janet Napolitano and key Republican legislators both propose to dip into that rainy day fund to resolve this year’s deficit. But the GOP plan also proposes severe and immediate spending cuts; the governor hopes to make up much of the gap by borrowing nearly $400 million for school construction costs this fiscal year rather than paying cash.

Martin also said there is no evidence that the pace of state spending has slowed despite statements by the governor that she directed agency chiefs back in July to start cutting expenses. He said the state spent 47 percent of its budget in the first six months of the fiscal year — the same figure he said has been the state’s average.

Gubernatorial press aide Jeanine L’Ecuyer said spending has been trimmed. And she said she “really would question” what Martin is saying, suggesting political motives behind the figures.

“He wants to be governor really bad,” she said of the Phoenix Republican.

But Martin said the spending numbers are accurate.

What happens if budget negotiations falter and the kitty runs dry is less than clear.

Martin said the state could stop paying its non-automatic bills, essentially leaving some suppliers and others stranded unless and until lawmakers find the cash.

More problematic, he said, are checks written for routine expenses, particularly payroll checks. He said these go out automatically.

But since the state has no “overdraft protection” plan with its servicing bank, that bank may refuse to honor them.

By Howard Fischer
Capitol Media Services

Information from: http://www.aztreasury.gov/media/2008/SierraVista-01-08.html, Sierra Vista Herald

Ariz. treasurer: State’s spendable cash runs out in late May

PHOENIX (AP) – State Treasurer Dean Martin says the state will run out of cash it can spend in late May – five weeks before the end of the fiscal year – unless legislators act.

Republican legislators and Democratic Gov. Janet Napolitano are debating how the state should close a revenue shortfall estimated at up to $970 million in the current $10.6 billion budget.

Martin’s office invests the state’s cash and he told legislators Tuesday that spending is exceeding receipts.

He said the state could spend money in its reserve and other funds. But he also said his office can’t touch that money without legislative authorization.
He also said there’s no indication that state agencies reduced their overall spending during the first half of the fiscal year.

Associated Press Writer

Information from: http://www.aztreasury.gov/media/2008/KOLD-01-08.html