Massachusetts may have to postpone capital spending for seven years and cut most programs by more than 70% if a referendum to gradually eliminate the state's personal income tax passes, according to a report released yesterday.

At the same time, the state's Treasury Department confirmed that it has been in discussions over the past week with the U.S. Treasury regarding the state potentially borrowing money from the federal government as a "policy option," and is not connected to recent attempts to access the short-term market. Officials still plan on pricing $750 million of short-term notes today after postponing the deal last week due to market conditions, an issue that Massachusetts Treasurer Timothy Cahill called "a full-blown crisis."

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