Arizona Treasurer Dean Martin borrowed $339.3 million from an investment pool of hundreds of state government accounts to pay for operations until sales tax collections flow into the general fund at the end of April.

The government issued state Treasury warranty notes last week to borrow the money at an interest rate of 0.51%. Martin had suggested a commercial paper program, but determined it would be cheaper for the state to borrow the money from itself.

Officials had expected to borrow $298 million, but had to increase the amount by 14% as collections fell faster than expected.

Martin said the state collects an average of $22 million a day in taxes and fees, but spends $27 million a day.

The average daily balance in the state’s operating fund fell to $859 million this month from $1.9 billion in April 2007. The balance was zero at one point last week.

“The state is basically living paycheck to paycheck,” Martin said.

Arizona had not issued Treasury warrants to cover a low bank balance since the Great Depression of the 1930s.

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