Given even suggested that the county should enter into a complex financing agreement that would, supposedly, allow it to reap up to $1.5 million by borrowing money against the potential savings from existing leases.

The supervisors ultimately voted to go ahead and refinance the general obligation bonds, but delayed a decision on the other components of the Peacock Plan.

The bond refinancing is a sign of the county's desperate straits, because it almost surely means that the county's bond rating will be lowered for the second time in a year.

The bond markets do not look kindly on governments that can't honor their bond obligations and divert money meant for capital improvements to operating costs, says Chris Mushell of Moody's Investment Services.

Mushell also says that bond raters will be watching closely to see if the county manages to balance its budget next year. If not, he says, the value of Maricopa County bonds may continue in a downward spiral that will hurt the county in two ways.

Even as the county needs to borrow more money, further downgrades in its bond rating will force it to pay more in interest to attract buyers for its bonds.

And the outlook for a balanced budget next year is bleak, according to Barbra Cooper, now the county's acting top administrator. Cooper says while many of the county's departments have already absorbed personnel cuts that will translate into lower budgets next year, several departments headed by elected officials--the Sheriff's Office, the County Attorney's Office and the court system--have not.

Cooper says she hoped that across-the-board personnel cuts would have trimmed $28 million from next year's projected $66 million deficit. So far, only 300 of the proposed 600 to 900 job reductions have occurred.

"We are going to have a problem," Cooper says.

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