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State cash reserves should last through September

The state’s cash reserves are dwindling fast, but Arizona should be able to keep paying its bills through the end of September.

If no budget is in place by the start of October, however, the state will likely have to borrow from the private sector for the first time in memory, if not the state’s history.

State Treasurer Dean Martin said the state will be able to make more than $400 million in scheduled payments to K-12 schools and universities, along with payroll for state employees, using money the state has been borrowing from non-general fund sources. If a budget is in place by the end of September, he said, the state likely will not have to borrow externally until the beginning of the 2010 calendar year.

“All of our forecasts show our cash position is going to improve enough in the first two weeks (of September) to allow us to make the payroll, allow us to make the schools payment and allow us to make the university payment. We don’t have any worries about those in September,” Martin said. “It’s when we get into late October, after the school payment in October, that’s when it’s going to start to get close.”

The Treasurer’s Office is in discussions with banks about borrowing money, which the state is permitted to do under the Arizona Constitution, as long as the money is paid back before the end of the fiscal year. He said the banks are wary of lending the state money without a budget in place that will show when and how they will be paid back.

Gov. Jan Brewer has repeatedly said that any budget that does not include provisions for new revenue – namely a ballot referral for the temporary one-cent sales tax increase she seeks – will not be acceptable to her. Brewer spokesman Paul Senseman said the governor would not be pressured into signing an inadequate budget, and said there may be other options for preventing a worsening of the state’s cash flow situation, though he declined to elaborate.

“The suggestion that this would in any way restrict what the governor will do in the interest of the citizens on the budget is erroneous,”

Senseman said of Martin’s comments. “She’s going to take action on the budget based upon what’s best for the state. And if that means it’s going to take additional legislative action to resolve the cash situation, then that’s what it will be.”

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