Gov. Jan Brewer refused Thursday to make Arizona the second state in the nation to declare privately minted gold and silver coins, bars and ingots to be legal tender in the state.
In vetoing the measure, Brewer said she shares the concerns of proponents that the dollar isn't worth what it used to be. And she said it's likely to get worse "as a result of an unsustainable federal deficit.''
But the governor said she's not ready to take the plunge -- one that so far only Utah has taken.
The legislation would have essentially done two things.
First, it would have put these precious metal coins and even bullion on the same legal footing in Arizona as dollars printed by the Federal Reserve Board.
Sen. Chester Crandell, R-Heber, said the legislation, by itself, would not mean Arizonans will start paying for their grocery and utility bills in precious metals.
But he said it would set the stage for a time when people will want to use these coins rather than the paper currency now being issued by the Federal Reserve, money that some people believe could become worthless due to hyperinflation. Anbd Miles Lester, one of those who testified earlier this year at a Senate hearing, called the legislation "a lifeboat for Arizona so we can construct Plan B'' when those greenbacks are no longer widely accepted.
Sen. Steve Farley, D-Tucson, openly worried about the problems the legislation would create for merchants, stuck with trying to figure out the purity of the metal coins and bars presented to them, or even if they were counterfeit.
Nothing in the proposal, though, would have required merchants to accept the coins. Conversely, nothing in current law prevents individuals now from trading goods and services for precious metals.
Brewer's concerns, however, appear to be more with the other half of the legislation which would spell out that gold and silver coins issued at any time by the U.S. government are money and not a commodity.
That difference is crucial.
Someone who invests in gold or silver coins is subject to capital gains taxes if they eventually are sold for a profit. But if those coins are "legal tender,'' then the exchange of those for dollars -- even at a gain -- would be tax exempt.
"This would result in lost revenue to the state, while giving businesses that buy and sell collectable coins or currency originally authorized by Congress an unfair tax advantage,'' the governor wrote.