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House GOP leaders’ budget plan would go easier on cities, schools

PHOENIX – Arizona House Republican leaders sharpened their budget-balancing proposal Monday, saying provisions to get hundreds of millions of dollars from municipalities and school districts now include sweeteners and, for the cities and towns, would be voluntary.

The Republican leaders formally introduced 10 bills to implement their version of the proposal – Senate GOP leaders have a similar one – and scheduled a Tuesday meeting for the House Appropriations Committee to act on it.

Arizona faces a projected shortfall of roughly $3 billion in the still-developing budget for the fiscal year that begins July 1. The shortfall is based on $11 billion of projected spending, though spending cuts will be a major component of whatever budget ultimately is enacted.

With rising unemployment and continued slumps in construction, retail sales and financial transactions that generate taxable capital gains, the state also faces a growing new shortfall in the current year’s budget although lawmakers closed a $1.6 billion gap back in January.

Saying that the state must avoid crippling its important services, Gov. Jan Brewer has proposed a temporary tax increase along with spending cuts and use of federal stimulus dollars. Most majority Republican lawmakers balked at increasing taxes, which they said would batter the already ailing economy.

Instead, the GOP lawmakers’ proposal calls for spending cuts, raids on special purpose funds, use of stimulus money and new moves to grab money that they say can be diverted from school districts and municipalities.

The proposal originally called for taking $300 million from school districts’ reserve accounts, but it was reduced Monday to $295 million and only $255 million would go to the state. The other $40 million would be given to districts statewide to pay for utility cases.

Lawmakers have said many districts’ reserves carried from year to year exceed maximum levels set by state law, and Rep. John Kavanagh, R-Fountain Hills, said it’s only money that school districts can’t legally spend that would be swept.

The Arizona Tax Research Association, a business-backed lobbyist group, recently reported that districts began the current fiscal year with $329.8 million of money they legally couldn’t spend. That’s apart from money required for debt service and other legal purposes and obligations, the association said.

Arizona School Boards Association officials were reviewing the revised proposal and declined immediate comment.


Budget bill provisions

Key aspects of House Republicans’ proposal to close a roughly $3 billion shortfall anticipated in the state budget for the 2009-2010 fiscal year beginning July 1:


Spending cuts: $649.6 million from most state programs and services.

Sweeps: $393.6 million swept from numerous special-purpose funds.

Stimulus money: Use approximately $990 million, mostly through increased federal funding for Medicaid health-care costs.

District balances: Sweep $255 million from school districts’ cash balances. Impact fees: Sweep $210 million of municipal impact fees paid by developers.


Permanently repeal the state “equalization” property tax, which is now scheduled to take effect after a three-year suspension.

Require Maricopa County and Pima County to pay the state $66.2 million and $16.8 million, respectively.

Sell one Department of Public Safety twin-engine airplane and one DPS Helicopter.

Sell the Department of Agriculture lab. Increase probation fees and increase probation officers’ caseloads.

Require people taking defensive-driving costs to pay a $45 surcharge.

The money would go to the general fund and a new fund to pay for state crime lab costs.

Reduce state funding for school equipment and suspend state funding for school building maintenance.

Adjust basic state funding for education only for transportation costs, not overall as in past years.

Reduce Arizona Health Care Cost Containment payment rates to health-care providers by 5 percent.

Fund the Land Department’s management of state trust land with 10 percent share of receipts.

Source: Bill summaries by Joint Legislative Budget Committee staff.

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