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Will Arizona Be the Next State to Issue IOUs?

Leonard Gilroy
August 13, 2009, 3:15pm

Jeremy Duda at the Arizona Capital Times reports on (subscription required) a warning from Arizona's treasurer that the state may need to follow in the unenviable footsteps of California and start issuing IOUs as early as October to avert a looming cash crunch as the legislature and Governor continue to try and belatedly enact a fiscal year 2010 budget.

"If that actually happens, if we can't give the general fund any more money and the banks won't lend us any money, we're literally at a point where the governor is going to have to decide who doesn't get paid – vendors, employees, layoffs, furloughs, IOUs. It's basically exactly what California went through. We’re as little as two months away from (it)," said [Arizona State Treasurer Dean] Martin, who is contemplating a run for governor in 2010.

It wouldn't be the first time the state has sought a form of IOU this year, having borrowed $340 million from the state investment pool earlier in the year to address an immediate cash crisis.

Hmmmm...IOUs, structural budget deficits as far as the eye can see, policymakers dipping their toes into privatization when they should be diving in headfirst...maybe Newsweek wasn't far off on Arizona. You'd think having a front row seat to California's fiscal madness would teach you all of the lessons you'd need about what not to do, but it apparently still hasn't sunk in yet here in Arizona.

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Leonard Gilroy is Director of Government Reform


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