PHOENIX - 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 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 have meant Arizonans would start paying for their grocery and utility bills in precious metals.
But he said it would set the stage for a time when he predicts people will want to use these coins rather than the paper currency now being issued by the Federal Reserve, money that some people contend could become worthless because of hyperinflation.
Sen. Steve Farley, D-Tucson, worried about the problems the legislation would create for merchants, if they were stuck trying to figure out the purity of the metal coins and bars presented to them, or even if they were counterfeit.
The proposal would not have required merchants to accept the coins. Conversely, nothing in current law prevents people from trading goods and services for precious metals.
Brewer's concerns 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 collectible coins or currency originally authorized by Congress an unfair tax advantage," Brewer wrote.