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Arizona Government Issuing IOUs, Weeks From Going Belly Up

How will Arizona handle this?

money lincolnThis just in- the coffers of the State of Arizona are empty and they’ll be paying in the form of IOUs.

“Over 60% of our state budget is locked down by those voter mandates,” State Representative Vic Williams told KOLD News, and those funds cannot be touched.

Legislators have been unable to resolve the budget crisis, leaving the state to pay with IOUs not only government employees but those that rely on the government like child care centers. Officials state they are working with banks in recognizing the IOUs, but that’s nothing more than a band-aid on a gaping wound.

What’s next for the State? Legislators will have to come together and agree on the way forward, taxes will probably have to go up despite the skyrocketing foreclosure market in pockets of the state, and budgets will have to be slashed (and managed better than they have been in the past).

Is Arizona the first in line to issue IOUs? Will other struggling states come up against voter mandated funds that drain the State’s bank account? How have they and how will others handle this situation as they come up against it? Despite the origination point of the problem, this crisis has a great impact on those that live in the State.

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Lani is the COO and News Director at The American Genius, has co-authored a book, co-founded BASHH, Austin Digital Jobs, Remote Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.

14 Comments

14 Comments

  1. newhomelistings

    January 4, 2010 at 5:20 pm

    What is the impact it will have on Arizona state residents? Cut government programs, etc.?

  2. Portland Condo Auctions

    January 4, 2010 at 7:36 pm

    Hmmmmm. Go figure that financial instability and runaway spending would come from John McCains favorite red state. -Tyler

  3. Guy McPherson

    January 6, 2010 at 8:47 pm

    For all practical purposes in an industrial economy, energy is money. We passed the world oil peak nearly five years ago, so we’re on the downhill of energy (hence, money). All energy is derived from oil, so we’re headed for the post-industrial Stone Age.

    Instead of making other arrangements, politicians and the media told us we could have infinite growth on a finite planet. And, silly us, we believed them.

    Arizona might be the first state to need a bailout from the feds, but it won’t be the last. Hyperinflation will precede the Stone Age, but not by much.

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