How bad is it? Arizona applies for bank loan

[Pale Blue Dot]

Source: Financial Week

Arizona, which may run out of cash in 60 to 90 days, is in talks to open its first-ever line of credit from a bank, seeking up to $5.7 billion so it can pay its bills, the state treasurer said.

Arizona’s financial troubles are severe. Its state government faces a $1.2 billion shortfall in its $9.9 billion budget over the remainder of its fiscal year, likely to be addressed by deep spending cuts. Revenues tumbled after its once red-hot housing market crashed, sending ripples through its broader economy.

Arizona’s unemployment rate climbed to 6.3% in November from 4.1% a year earlier. Non-farm payrolls shrank by 83,100 jobs, or by 3.1%, over the 12-month period.

As a result, Arizona’s coffers have been thinning at “unprecedented” speed, forcing it to begin talks with Bank of America State Treasurer Dean Martin told Reuters in a telephone interview late on Monday.

“We just don’t have any cash,” Mr. Martin said. “We’re not in a sustainable financial situation.”


Read more: http://financialweek.com/apps/pbcs.dll/article?AID=/20090106/REG/901069974/1036

[Veritas_et_Aequitas]

1. I wonder what AZ's credit score is like. nt

[gristy]

2. .

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=114x53117

[Pale Blue Dot]

4. I know. I thought it should be posted here, too. nt

[amerikat]

3. But, but, but,,,,,John McCain says the economy is sound.

He may have to sell all of his homes.

[maddogesq]

5. Not surprised at all over this.

AZ has been a part of my sales territroy for 11 years (execept 2001-2004), and I saw a tremendous decline in the econ in that sate. My area (until yesterday) was the Southwest, and the growing area there is in the north suburbs of Dallas.

Next stop on the meltdown: Vegas. If yo don't believe me, PM me and I will give you my whatever 17 reasons.

[Indenturedebtor]

18. Yeah I've watched it go downhill from 2005 on. I was in sales as well

Every month I'd see worse credit, more unemployed, more people working 3 jobs to stay afloat. But this is a Repukelican state, an they are always screwed up.

[BattyDem]

6. If they default, does the bank take over the state?

:shrug:

I can see it now ... we're going to end up with a state called "Bank of America's Arizona" :eyes:

[Doctor Cynic]

9. They can take over the 7 or 8 houses that their senior senator owns.

[Endangered Specie]

14. Betcha good money that Bank of America will find out EXACTLY how many

houses he owns!

[marybourg]

7. That's because instead of paying state income taxes,

we Arizonians get to direct our tax money (up to $500 for a couple, more than my yearly tax liability) to a religious or private school. I kid you not. Most of course goes to "Christian" schools. I believe corporations are allowed to route $1000 to "tuition scholarship programs" at same kind of schools.

[SpookyCat]

8. Please be kidding...n/t

[LiberalFighter]

10. Someone needs to calculate the cost of that expense

and bring it to the attention of the Arizona nutcases. Maybe suggest that those directing it their that their liability will be increased by $1,000.

I hope they don't get to claim a deduction for it on their federal return.

[Mosby]

20. There are two different school tax credits in AZ

Choir, yearbook, science clubs, athletics, school plays, out-of-state competitions and dozens of other extracurricular school programs would not be possible without the generosity of taxpayers.

Statewide, more than 211,000 taxpayers in 2007 donated nearly $44 million for public school tax-credit programs. Taxpayers get dollar-for-dollar credit on their state income taxes for the donations.

As children enjoy the programs fueled by 2007 tax-credit donations, school officials are drumming up support for more donations to continue programs next year.

Meanwhile, taxpayers also get tax credits by donating money for private school scholarships. In 2007, more than $54 million was given to private school tuition organizations that provided scholarships for about 27,000 students at 359 Arizona private schools.

The deadline is Dec. 31 to make tax-credit donations for public schools or private school tuition. While public schools use funds for extracurricular activities, private schools can only use the dollars for tuition payments.

http://www.azcentral.com/news/articles/2008/11/23/20081123taxcredit1123.html

[dakota_democrat]

11. Moral of the story: Move to North Dakota

http://www.bismarcktribune.com/articles/2008/08/05/news/topnews/161689.txt

Projected surplus of $1.2 billion!

[WriteDown]

21. Geez...

How is that even possible? I was just teasing my girlfriend the other day about moving to North Dakota.

[Iggo]

12. No duh, Durwood.

"Arizona’s financial troubles are severe."

Yeah, I wasn't sure where this story was going 'til I read that sentence.

[Endangered Specie]

13. I wonder how you foreclose on a whole state?

[redstate_democrat]

15. Since Napolitano will be vacating her seat and moving to D.C.

the Lt. winger will step in as governor. I expect the state of AZ will have not only this budget shortfall to contend with, but many more issues as well.

[lonestarnot]

16. Ackety. That thing got my blood a boil'n!

[balantz]

17. Mine too

[unblock]

19. why don't they just declare themselves a bank and borrow from the fed?