State employees could get IOUs

Phoenix, AZ – State and university employees could wind up with I-O-Us in their
pay envelopes in February instead of checks. Arizona Public
Radio's Howard Fischer explains why.

It's no secret that, even with the budget fixes last month, the
state is still running $1.6 billion in the red. That's largely
due to sales tax collections coming in at rates far below last
year as consumers keep their purses and wallet closed.

But while
lawmakers struggle to balance the books they've still got to deal
with the reality of bills that are coming due. State Treasurer
Dean Martin already has borrowed $700 million from Bank of
America and another $500 million from other accounts he doesn't

Earlier this year lawmakers agreed to sell off a dozen state
buildings. The action is more akin to a mortgage designed to
raise $737 million. Martin told lawmakers Monday that deal is
supposed to go through in late January -- just ahead of the
scheduled $325 million owed to schools on Feb. 1.

"Should that not happen, should there be a hiccup, a sneeze,
something, anything gets lost in the mail, we will not be able to
make the February school payment. There's just not enough cash.
The credit cards are maxed out. Your at your limit."

Martin said it's highly unlikely the banks will honor those IOUs.
That will leave public employees with a piece of paper promising
to make good within 90 days -- but a piece of paper that won't
help them buy food for their families, pay the mortgage or heat
their homes.