As lawmakers convened Tuesday to start chipping away at a $2 billion budget deficit, the state is preparing to turn to outside lenders for the first time in Arizona history.

The borrowing is needed to give the state enough cash to carry it through ongoing revenue shortfalls, state Treasurer Dean Martin said.

He estimates the state will need to borrow $700 million to see it through the June 30 end of the fiscal year. As of Tuesday, Martin said, the state had exceeded its threshold of $500 million in IOUs and would need to turn to institutional lenders. To date, the state has been borrowing against internal accounts.