government has managed to blow through a $700 million loan from the Bank of America in less than a week, and that wasn't even enough to keep things going.
According to Treasurer Dean Martin, his office had to dip into internal sources to come up with the extra $73 million the state needed just to keep the lights on.
"Government spending in Arizona is out of control. We are more than three-quarters of $1 billion in the red for daily operations," Martin says. "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 [rein] in excessive spending; we can no longer afford to continue spending more than we make."
The state is currently about $1.6 billion in the hole, and the $700 million loan the state spent last week is just the beginning of excessive spending of borrowed money.
Sources in the Treasurer's Office tell New Times the state has a $700 million line of credit with Bank of America every single day. This means that every day the Legislature and the governor bicker, they drive the state further into debt, State officials are living in a fantasy land, where rather than explaining to government employees why their paychecks bounced, they can just go to the bank and borrow another $700 million.
Unfortunately, Treasurer Martin seems to be the only government official with any understanding of how finance works and has been warning the governor and the Legislature for months that the state needs a balanced budget fast because there is a little thing in the finance world called interest.
Every day a senator disappears before a vote, goes on vacation, or the governor impotently advocates for a 1-cent sales-tax increase, taxpayers are charged the interest on these loans.
The governor has called for what is now the fourth legislative special session to deal with the budget, expected to start next week. If recent history tells us anything, nothing will get accomplished, and we can look forward to another special session in January.
Keep Phoenix New Times Free... Since we started Phoenix New Times, it has been defined as the free, independent voice of Phoenix, and we would like to keep it that way. Offering our readers free access to incisive coverage of local news, food and culture. Producing stories on everything from political scandals to the hottest new bands, with gutsy reporting, stylish writing, and staffers who've won everything from the Society of Professional Journalists' Sigma Delta Chi feature-writing award to the Casey Medal for Meritorious Journalism. But with local journalism's existence under siege and advertising revenue setbacks having a larger impact, it is important now more than ever for us to rally support behind funding our local journalism. You can help by participating in our "I Support" membership program, allowing us to keep covering Phoenix with no paywalls.