The governors of Minnesota and Wisconsin hope to save money by jointly purchasing products and services and by sharing specialized equipment.
Both states are facing huge deficits as the economy continues to struggle.
Gov. Tim Pawlenty of Minnesota and Gov. Jim Doyle of Wisconsin announced today that they were calling on leaders of their state agencies to identify ways the two states could cooperate. They gave the agencies until Feb. 27 to report back with ideas.
Pawlenty says the agreement can serve as a model for the rest of the country.
"Minnesota and Wisconsin are medium size states, individually in the place of the country, in the place of the global marketplace, we're modest in size. We have to find ways to play big, as they say in basketball. This type of arrangement will allow us to play big," said Pawlenty.
The governors say the states could save money by purchasing such things as road salt, computer software and institutional food together. They also say money could be saved by sharing specialized vehicles, such as patrol boats and aircraft.
The governors haven't said how much money might be saved.
Minnesota is looking at a deficit of $4.8 billion in its upcoming two-year budget, and Wisconsin faces a deficit of $5.4 billion by June 2011.
(The Associated Press contributed to this report)