Posts Tagged ‘Legislature’
Written on December 15th, 2009 by ccottrellno shouts
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.”
Written on December 15th, 2009 by ccottrellone shout
PHOENIX— State and university employees could wind up with IOUs in their pay envelopes instead of checks in February if the planned sale of state buildings hits a snag, state Treasurer Dean Martin warned Monday.
And that could leave worker with a piece of paper that won’t help them buy food for their families, pay the mortgage or heat their homes.
Martin told legislators that by the end of January the state will have borrowed about $1.1 billion to pay its bills. The total amount Martin has available, both internally and from Bank of America, is $1.2 billion.
But the state is obligated to make a payment of about $325 million to public schools on Feb. 1.
What’s supposed to happen around the third or fourth week of January, Martin said, is the state will sell off — at least in title only — a dozen state buildings in exchange for at least $737 million. Martin said that will provide enough operating capital to keep the state going and, more important, to ensure that the payroll checks and bill payments that are sent out are good.
“Should that not happen, should there be a hiccup, a sneeze, something, anything gets lost in the mail, we will not be able to make the February school payment,’’ Martin said.
“There’s just not enough cash,’’ he continued. “The credit cards are maxed out, you’re at your limit.’’
That leaves him only one legal option for paying those to whom the state owes money: IOUs.
“They’ll get a note saying, ‘We’ll give you the money on this date,’ up to 90 days’’ in the future.
The state would be obligated to pay interest. But Martin said it likely would be the same discounted annual rate he got from Bank of America for the state’s line of credit: about three-fourths of a percent.
“The bigger issue is what that does to the economy,’’ he continued. “You put 30,000 state employees without paychecks, the trickle effect throughout the economy, what that does to the vendors, it needs to be avoided.’’
California issued IOUs earlier this year while it was trying to get its finances in order.
The banks did cash those — for a while. But Martin said the chances of banks honoring the IOUs here are minimal, as the state already is borrowing just to cover the checks it already is writing.
The treasurer’s warnings came as lawmakers sought some answers about the state’s finances.
Legislators know that the current anticipated deficit for this year stands at about $1.6 billion, even with the spending changes made last month, because sales tax collections have been so much weaker than a year earlier as consumers buy less and construction is slowed. And Richard Stavneak, staff director of the Joint Legislative Budget Committee, said the state is on track for a $3 billion gap between revenues and spending next year.
What they wanted to know was how the state manages its finances while trying to come up with a fix.
Stavneak said the temporary sales tax hike being pushed by Gov. Jan Brewer won’t do much, if anything, to help the current mess.
He said that levy could bring in up to $950 million a year. But if an election isn’t conducted until March, it might not be until May or even June before the increased collections show up in the treasury; the fiscal year ends June 30.
That leaves the state struggling to pay its bills in the interim.
Lawmakers approved a plan earlier this year to sell off state buildings for up-front cash and then lease them back. The plan is more akin to a mortgage, with investors buying shares in that $737 million debt in exchange for some rate of return over the next 20 years.
In the interim, Martin has obtained a $700 million line of credit from Bank of America. He also has access to about $500 million from various internal accounts, money that doesn’t belong to the treasury.
And when that’s gone?
“You send out the IOUs,’’ he said.
Martin said he probably can finesse the debt if it looks like the sale of the buildings will take place within a few days after the school payment is due. But if there’s some legal or other impediment to completing the sale, he can only send out IOUs.
“That’s what the statutes require,’’ he said.
There is another legal option: Delay the payment to schools. Martin said though, that would require legislative action.
But he said that’s not a solution, as the schools then would have to borrow money themselves — and agree to pay interest — to meet their payroll and other obligations until the state finally came up with the cash it owes.
“Essentially what you would be doing is shifting the state’s borrowing off to the schools,’’ Martin said. He said that, from a political perspective, lawmakers likely would agree to pay any interest costs the schools incurred.
Howard Fischer, Capitol Media Services
Information from: http://www.aztreasury.gov/media/2009/DouglasDispatch-12-08-09.html, Douglas Dispatch
Written on December 14th, 2009 by ccottrellno shouts
“Anything to help out in these tough times would be greatly appreciate,” said DePhillips, who attended the second annual Financial and Benefits Fair, sponsored by the Sun City West Investment Club, at Palm Ridge Recreation Center. The fair featured several financial firms, which set up exhibits and provided information to residents looking for ideas to combat the flagging economy.
Exhibitors included Fidelity Investments, Morgan Wealth, Reverse Mortgage of America, Edward Jones, JP Morgan Chase Bank, H&R Block and others.
The firms also offered several workshops on such topics as “Out smarting Investment Fraud,” “What to do with Life Insurance” and “Investing in a Volatile Market.”
“It’s always important for retired seniors to be careful with what we do with our money,” said Ken Foley, president of the investment club. “This fair helps and gives you a variety of approaches to help with your investments.”
Joan Haugan and her husband, Gene, said the fair couldn’t have come at a better time.
“I think we all need help right now, and what better way to do that than by getting advice straight from the horse’s mouth,” Haugan said.
Arizona State Treasurer Dean Martin unveiled a new guide “50 Ways to Stay Financially Fit Beyond 50″ at the fair.
“This is a chance for seniors to have tips and advice on getting through these rough times,” Martin said.
Among the 50 tips offered in the guide are:
• Make no mistakes. Check your credit report so you can spot any errors before creditors or others do.
• Keep a secret. Keep your PIN number out of sight. Martin said seniors frequently write the number on the back of a bank card.
• Get secure. Use a random number for your PIN and if you have to write it down disguise it as a phone number.
• Be prepared. Make plans to pay your bills should you have to spend time in the hospital for a few weeks. Make sure someone you trust knows where this information is.
• Emergency fund. Have savings that can get you through three to six months should that become necessary.
Martin also discussed the overall economic condition of the state and nation.
“It’s going to take time to get out of the state that we’re in, and it just won’t happen overnight,” he said.
Information from: yourwestvalley.com, http://aztreasury.gov/media/2009/Your_West_Valley_com_11-13-09.html
Written on December 9th, 2009 by ccottrellone shout
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
Written on November 23rd, 2009 by ccottrellno shouts
As work on the overdue state budget hit a new snag Monday, state Treasuruer Dean Martin said it may be too late for a meaningful solution.
Martin compared the state’s budget problems with frostbite.
“At this point, we’re talking about how much of the leg are you going to lose. They’ve missed the opportunity just to lose a toe or two,” Martin told News/Radio 92-3 KTAR’s Jay Lawrence on Sunday.
Martin said it’s hard to place the blame for the budget crisis on just one person.
“I heard a joke the other day. They said (former Gov. Janet) Napolitano and the Legislature drove the budget off into the ditch and the next governor drove the tow truck into the same ditch.”
Right now, the state has had to borrow $700 million just to pay the bills.
The Senate put off its floor session Monday morning as Republicans tried to win Democrat votes for two bills reducing spending for K-12 schools and social services provided by the Department of Economic Security.
Senate Minority Leader Jorge Garcia said the talks concern a Democratic senator’s desire to give Indian reservation school districts leeway to use federal impact aid money to backfill state funding reductions.
Senate Republicans who tried to pass the package without any Democratic votes came up short on Thursday.
The package would close about a quarter of the state’s projected $2 billion shortfall for the fiscal year that began July 1.
Information from: ktar.com, http://aztreasury.gov/media/2009/KTAR-11-23-09.html
Written on November 13th, 2009 by ccottrellno shouts
“Anything to help out in these tough times would be greatly appreciate,” said DePhillips, who attended the second annual Financial and Benefits Fair, sponsored by the Sun City West Investment Club, at Palm Ridge Recreation Center. The fair featured several financial firms, which set up exhibits and provided information to residents looking for ideas to combat the flagging economy.
Exhibitors included Fidelity Investments, Morgan Wealth, Reverse Mortgage of America, Edward Jones, JP Morgan Chase Bank, H&R Block and others.
The firms also offered several workshops on such topics as “Out smarting Investment Fraud,” “What to do with Life Insurance” and “Investing in a Volatile Market.”
“It’s always important for retired seniors to be careful with what we do with our money,” said Ken Foley, president of the investment club. “This fair helps and gives you a variety of approaches to help with your investments.”
Joan Haugan and her husband, Gene, said the fair couldn’t have come at a better time.
“I think we all need help right now, and what better way to do that than by getting advice straight from the horse’s mouth,” Haugan said.
Arizona State Treasurer Dean Martin unveiled a new guide “50 Ways to Stay Financially Fit Beyond 50″ at the fair.
“This is a chance for seniors to have tips and advice on getting through these rough times,” Martin said.
Among the 50 tips offered in the guide are:
• Make no mistakes. Check your credit report so you can spot any errors before creditors or others do.
• Keep a secret. Keep your PIN number out of sight. Martin said seniors frequently write the number on the back of a bank card.
• Get secure. Use a random number for your PIN and if you have to write it down disguise it as a phone number.
• Be prepared. Make plans to pay your bills should you have to spend time in the hospital for a few weeks. Make sure someone you trust knows where this information is.
• Emergency fund. Have savings that can get you through three to six months should that become necessary.
Martin also discussed the overall economic condition of the state and nation.
“It’s going to take time to get out of the state that we’re in, and it just won’t happen overnight,” he said.
Information from: yourwestvalley.com, http://aztreasury.gov/media/2009/Your_West_Valley_com_11-13-09.html
Written on September 29th, 2009 by ccottrellno shouts
Arizona State Treasurer Dean Martin said the actions of the governor and Legislature show a “disconnect with reality,” and he’s calling for a return to 2005-06 spending levels.
Martin stopped in Lake Havasu City Tuesday as he travels around the state speaking with residents and city and county officials about the state’s current budget crisis.
Currently the state is short about $1 billion, and next year the deficit is expected to hit $3 billion to $4 billion.
“The budget continued to grow even as the recession hit. In fiscal year 2008 spending increased 10 percent while revenue declined that much. In FY 2009 spending was up 6 percent while revenues dropped 19 percent,” Martin said. “That’s a disconnect with reality.”
Martin also questioned Gov. Jan Brewer’s insistence on a new sales tax.
“The economy is at its weakest point right now. No time is a good time for a tax increase but this is absolutely the worst time,” Martin said. “And even if it passed, we’re not at a sustainable level.”
To get to the point where revenues could support state services, Martin said the immediate solution is to reduce the budget back to Fiscal Year 2005-06.
“If you talked to most private sector businesses these days, they’d be happy to be at 2005 levels. They’ve cut back even further,” he said.
He also suggests that reserves — currently depleted thanks to legislative drawdowns over the past two years — be set by major budget sector and those agencies take responsibility to maintain the reserve levels as set by law.
“And we have to deal with a major spending leak — the entitlement programs,” Martin said. “We’ve grown welfare while cutting K-12 (education) and public safety.”
The problem involves the use of tobacco settlement money. Under the voter-approved plan, the first 20 percent of the budget for the Arizona Cost Containment Health Care System has to be paid for from the state’s general fund before the tobacco money is used.
“So you have to pay that 20 percent and if revenues to the state are off 10 percent, that’s even more that has to be made up somewhere else,” he said.
Martin said the solution he’s suggesting is two ballot questions. The first asking voters if the public health insurance and welfare system be funded solely by the tobacco funds and nothing come from the general fund. The other would be whether voters would like a tax increase to make up the difference between the tobacco funds and the expenditures.
“ACCHS is currently at $1.5 billion. Even in the best of times the state can’t sustain that,” he said. “But only the voters can solve this one.”
Meanwhile the state is looking to borrow about $500 million, pledging its revenues against the loans to cover the day-to-day operations. Bids from major lenders are due today and will be decided on next month.
“The state has never done anything like this before,” Martin said. “We’re not sure how those bids are going to come back.”
He said that internal borrowing sees the state pay anywhere from .5 to 1.5 percent in interest, and he expects the bids from the private sector lenders to come in at about that level or a bit lower.
“But if the market freezes or the state’s financial condition worsens, that could go up,” Martin said, noting there is a 2.5 percent cap set by law.
“You can’t spend more than you make,” he said. “Essentially the state is broke. We have to bring expenditures and revenues in line.”
David Bell , Havasu News
Information from: http://www.aztreasury.gov/media/2009/HavasuNews-09-22-09.html
Written on September 9th, 2009 by ccottrellno shouts
State Treasurer Dean Martin, who is considering runnng for governor next year, lambasted the state’s plan to sell certain state properties to generate fast cash and then lease them back.
He implied that lease-purchase programs are a budget gimmick that weakens finances and erodes respect for Arizona.
“It makes us look like Rent-A-Center,” he said Wednesday in a speech at the Sheraton Wild Horse Pass Resort & Spa. He was the keynote speaker at a convention of the Arizona Agents Alliance Association, a group of independent insurance agencies.
Gov. Jan Brewer on Sept. 3 signed a part of the budget that allows the state to sell properties. Among the possibilities are the House and Senate buildings at the Capitol, the State Hospital and state fairgrounds. Government functions at those sites would continue. The state has made sale/leaseback deals in the past. But apparently this is the first time the state has earmarked revenue from the sales to finance general government operations.
The state can sell a building only once, he noted.
“Do you want to invest in a state that’s renting its Capitol building?” he asked.
“It’s a temporary solution,” he said. “Even if it gets us through this recession, we’re going to be in the same boat for the next recession.”
Also creating a solid rainy-day fund to help the state weather future recessions would be prudent and would build confidence in Arizona, he said.
As it is now, he fears that companies leaving California will skip over Arizona and head for Texas. He said Arizona’s infighting, its lack of a balanced budget put together on solid principles and its lack of foresight does not engender confidence in the state.
He also criticized Brewer’s veto of the repeal of the equalization property tax.
The tax, also referred to less often as the County Education Property Tax, was suspended three years ago by the Legislature.
The bill sent to the governor this year would have permanently repealed the tax, but she vetoed it.
The tax applies to businesses and homes. Rep. Steve Yarbrough, a Republican from Districtc 21, warned about the possibility of the cancellation of a permanent repeal when he spoke in January 2008 at a legislative breakfast in Chandler.
The tax means about $77 more to be paid on a home worth $200,000, he said then.
“There’s never a good time to raise taxes, but this is the worst possible time,” Martin said Wednesday. Legislative leaders and Brewer need to “stop infighting and start solving problems, to start planning and thinking long term,” he said.
He criticized the current state budget, which is close to a billion dollars in the red and which Martin said is cobbled together.
The dithering is costing taxpayers, he said.
“The quicker you solve the budget problem, the cheaper it is,” he said.
Martin recommended starting to balance the budget by taking a hard look at entitlement programs.
“We’ve been growing welfare spending while cutting education and public safety,” he said.
Ten years ago, ACCCHS, the state’s low-income health care program, had a budget of $200 million; today is more than $1.5 billion, he said.
The ACCCHS budget is growing 75 percent faster than the rest of the state budget, he added.
Martin was elected state treasurer in 2006. He served six years in the state Senate, where he was chairman of the Finance Committee.
By Luci Scott
Information from: http://www.aztreasury.gov/media/2009/AZCentral-09-09-09.html
Written on August 21st, 2009 by ccottrellno shouts
PHOENIX — State Treasurer Dean Martin says it’s time for Gov. Jan Brewer to sign a budget for the current fiscal year, which began eight weeks ago, and get on with business.
Martin said Brewer and state lawmakers are engaging in a multi-billion dollar game of brinkmanship over the budget and it needs to end. The latest move came Thursday when lawmakers shipped the governor a budget that once again does not include the temporary 1-cent increase in the state sales tax that she has demanded.
“Everybody should just realize that this tax increase for 2011 — there isn’t the votes for it right now,” Martin said. “But, we still have to balance 2010. Let’s get 2010 put behind us.”
On Twitter, the governor said Thursday evening that she had a lot of bills on her desk, “going to have to make some BIG decisions.”
Martin said if a budget isn’t signed soon, the state could have partial shutdowns this fall and the effects could last for years.
“Who wants to invest in a state that not only is having to sell its own Capitol building and rent it back, but can’t pay its own bills?” said Martin. “It doesn’t sound like an attractive place to invest. We really need to solve this problem.”
Meanwhile, Senate President Bob Burns has fired up a new commission to hunt down wasteful state spending.
Sen. Thayer Vershoor, a Gilbert Republican, will head the Arizona Budget Commission until the legislative session ends.
“The idea would be for us to go in and look at agencies like the Department of Economic Security, look at the K-12 system, the Department of Health Services, other agencies,” said Vershoor, who said he views himself as more consultant than hatchetman.
He said he doesn’t want to be arbitrary about budget cuts.
“We want to make sure that, as we look at these reductions, we’re reducing them in a way that serves the taxpayers of Arizona.”
Among things Vershoor is looking at is why K-12 funding jumped by 40 percent in the past four years, with a lot of the increase not reaching the classroom.
House Speaker Kirk Adams said he got no assurances from the governor during negotiations that she would sign the latest budget plan. She vetoes parts of a similar plan last month because it did not include the sales tax — either the Legislature passing it or putting it before voters in November.
“I am not in a position to predict what she will or will not do,” Adams said.
GOP leaders at the Legislature said they will continue to try to resurrect the Republican governor’s proposed sales tax hike by coupling it with $400 million in income tax cuts for individuals and corporations. The sales tax hike and income tax cuts were approved by the House in late July, but didn’t clear the Senate.
Republican Sen. Russell Pearce of Mesa said the Senate is probably one vote short of getting the income tax cuts approved and putting the sales tax proposal on the ballot for voters to decide. “The tax package is a win either way,” Pearce said. “It’s just a bigger win if that tax goes down at the ballot.”
Democratic Sen. Rebecca Rios of Apache Junction, who voted against the sales tax hike, criticized the coupling of the two ideas, saying revenue from the sales tax hike would be used to pay for income tax cuts totaling $200 million for individuals and $200 million for corporations.
The governor has until late Wednesday to act on the budget package.
“She hasn’t made any final determinations yet on what she is going to do with the bills,” said Brewer spokesman Paul Senseman.
The budget plan would use spending cuts, funding delays, borrowing, asset sales and federal stimulus money to close the deficit of more than $3 billion. The budget includes state spending of $8.3 billion padded by an additional $1.1 billion of federal stimulus funding.
The package includes the repeal of a state property tax that has been suspended for three years but was set to take effect again. Lawmakers missed a Monday deadline for approving the bill before counties were required to set tax rates. Legislative leaders say they still have a few days to get the bill signed and give counties enough time to readjust rates before they mail bills to property owners.
By Associated Press Writer
Information from: http://www.aztreasury.gov/media/2009/KTAR-08-21-09.html, KTAR.com
Written on August 20th, 2009 by ccottrellno shouts
PHOENIX – Arizona Treasurer Dean Martin says the state must enact a new state budget by the end of the week to keep its flexibility to borrow money from banks so the state can continue paying its bills.
The state was operating $386 million in the red as of Wednesday and has been making up for it by borrowing money from state government funds.
But Martin says the state will lose its flexibility to make internal loans when the figure hits the $500 million mark and will then need to borrow money from banks that aren’t willing to loan money to the state until its budget is balanced.
Arizona isn’t projected to reach its internal-loan limit until Oct. 15.
Still, Martin said the budget must get enacted this week to give the state the six to eight weeks needed to set up bank loans.
Information from: http://www.aztreasury.gov/media/2009/FOX-08-20-09.html
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