PHOENIX -- Arizona is maxing out its credit, according to the state treasurer.

“The state is literally broke,” said Arizona State Treasurer Dean Martin.

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For months, the state has had to borrow money from Bank of America to keep daily operations going. On Thursday, the state owed the bank $692 million.

Martin expects that amount to increase as the year goes on.

"You can see over time that we're just continuing to spend more than is coming in and that's because the budget's not balanced,” he said.

Lawmakers and the governor failed to create a balance budget last year because of disagreements over cuts and spending.

Martin said the state has fiscal problems beyond last year’s budget mess; in fact, the state currently spends $1 billion more a year than it earns.

"You can't spend more than you make for very long. Eventually, you're going to max out your credit cards and that's effectively what the state has done,” he said.

Martin said although it would take work and time, the state’s fiscal situation can be fixed; however, he also said you cannot put a price tag on how our money problems have affected our reputation.

"The real impact is what it's done to the status of Arizona,” he said. "It's scaring off potential investment and that's going to prolong our recession.”