Shelving borrowing means Ariz. left without backup

Arizona’s budget troubles could force the state to delay paying some bills as early as September, state Treasurer Dean Martin said Wednesday, in a situation complicated by his effort to win the Republican gubernatorial nomination over Gov. Jan Brewer.

Both Martin and Brewer are members of a state commission that met Wednesday but did not to renew the state’s borrowing from within government accounts and from a bank. Arizona began both forms of borrowing last year amid a budget crisis that continues to undermine the state’s finances.

Martin and the Loan Commission’s third member, Department of Administration interim director David Raber, attended the meeting. Brewer did not.

Martin ended the meeting without considering a renewal of internal borrowing of up to $500 million from state investment funds. That was after Raber proposed postponing consideration of a renewal of the state’s $700 million line of credit with Bank of America Corp. Martin had said the state shouldn’t continue that borrowing and instead should reduce its spending within its means.

Martin said after the meeting that the authority for both types of borrowing expires June 30, the end of the current fiscal year.

He said that could put the state in a bind by September, when it is scheduled to make several large payments to K-12 school districts, including several payments delayed from the current fiscal year as a budget-balancing step. The impact would likely be seen in payments to vendors and government units, he said.

“We basically cut off the state’s credit cards,” Martin said.

Martin said during the meeting that he scheduled it to accommodate the governor’s schedule and that her missing it indicated she didn’t care about the state’s finances.

Brewer spokesman Paul Senseman downplayed the outcome of Wednesday’s meeting and said Brewer hadn’t disclosed a course of action for the state to take to avoid a payment problem.

“Clearly the situation has improved, which is why he (Martin) didn’t need to take action today,” Senseman said. “We’ll continue to monitor it and take the appropriate steps and continue the smoothing of our internal cash situation.”

Senseman said Brewer was busy meeting with lawyers regarding the state’s new illegal immigration law, and enough commissioners were at the meeting to take action.

Martin, obviously pressing to have Brewer publicly discuss the state’s budget with him during a commission meeting, said action can be taken on relatively short notice to renew internal borrowing. It would take at least two months, however, to seek bank proposals to renew the external borrowing, he said.

The new skirmishing between Martin and Brewer comes 18 months after Martin clashed with Brewer’s predecessor, Democrat Janet Napolitano, during a commission meeting regarding borrowing and cash-flow concerns as the state’s budget crisis began.

Voters last month approved a temporary sales tax increase to help prop up state spending, but Martin said the state apparently won’t get $400 million of expected federal money for health care and that voters in November could reject roughly $470 million of transfers from special funds.

Martin said he wasn’t raising his concerns because of politics. The Republican gubernatorial primary – which also includes Yavapai County businessman Buz Mills, Tom Gordon of Mesa, and Matthew Jette of Apache Junction – is Aug. 24.

“I still have a fiduciary responsibility as treasurer,” he said. “This is her budget. It is not balanced.”