Arizona Near Bankruptcy

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Last week, the Central Arizona Board of Realtors had Arizona State Treasurer Dean Martin as the guest speaker. As he explained, the treasurer’s office serves as the state’s bank, thereby, collecting of revenues and disbursing payments.

In addition, his office supplies economic forecasts so the governor and legislature may prepare an informed annual budget.

Treasurer Martin stated that though the national economy has been in recession for a year, the statistics in Arizona show that we have been in a recessionary climate for almost eight years.

To make a long story short, Arizona is looking at and is very near bankruptcy because the governor and legislature continue to spend more than the revenues they receive.

Currently, the Arizona budget is forecast to have between a $3 and $4 billion dollar shortfall. To say it another way, our elected officials are going to spend $3 to $4 billion dollars more than they are going to receive.

The rainy day fund has been obliterated. Two major contributors to the government shortfall are the rapid expansion of AHCCCS (Arizona Health Care Cost Containment System) and the Department of Economic Security.

The AHCCCS budget since 1999 has grown by 75 percent and the Department of Economic Security has grown by 50 percent.

As far as the Arizona housing market, Treasurer Martin is forecasting that 2009 may be as challenging as 2008.

Until supply and demand even out, he forecasts that there will be a continuing softness in the market and some areas may still see significant reductions in housing prices, in particular, those areas which were over built. He mentioned that one of the hardest hit areas in the state is Pinal County.

Fortunately, Treasurer Martin had some good news.

Our unemployment rate is significantly better than it has been in previous economic downturns.

He expects the Arizona housing market to begin its gradual turnaround no later than the fourth quarter of 2009 with continued improvement and total correction not later than 2014.

If his forecast is correct, potential homebuyers who are sitting on the sidelines may want to consider a purchase.

Aside from Treasurer Martin’s presentation, it is important to note that 30-year interest rates are hovering around the 5 percent range. If you are thinking of refinancing your home, it is time to call your lender. These are historically low rates that we may not see again.

Ray Pugel is a designated broker for Coldwell Banker Bishop Realty. Contact him at (928) 474-2216.

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