Agency puts state on credit watch

Phoenix, AZ – Standard and Poor's currently gives Arizona a double-A rating on its debt. That isn't changing. But the firm is changing the outlook from stable to negative, citing the state's weak revenues
and the failure of lawmakers and the governor to adopt a budget for the fiscal year that began July 1. State Treasurer Dean Martin said there's a reason for that.

(Because of the situation, because of the conditions, they're
thought process is, either, one, they're going to be downgrading
or there's a strong likelihood that a downgrade is going to be
required based on fiscal conditions, economic conditions, budget

The announcement comes as Martin is attempting to secure a line
of credit with banks for Arizona to use to manage its cash flow
once the state runs out of money to lend itself to keep
government operating. Martin said while the rating remains the
same, that negative outlook is going to cost taxpayers more.

(Because what happens is, if you've got an A rating and it's
stable, you're going to get a better rate than an A rating that's
on negative watch because people are going to start thinking, oh,
are they going to get downrated to a B or a C.)

But Martin said he can't even get the banks to talk to him about
that line of credit until the state adopts a budget. For Arizona
Public Radio this is Howard Fischer.