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Legislature OKs budget plan that delays education spending

PHOENIX – The Arizona Legislature has approved a plan to close the current state budget’s growing shortfall by delaying some spending and using federal stimulus money. It also moves to trim the next budget’s shortfall by grabbing some school district money.

House and Senate votes Wednesday nearly tracked partisan lines as the chambers approved the Republican plan negotiated with Gov. Jan Brewer to close the current budget’s projected $650 million shortfall.

Brewer, a Republican, is expected to sign the two-bill package into law.

“If these bills are passed, they will receive the governor’s support,” Eileen Klein, Brewer’s budget director, told a legislative committee before the House and Senate votes.

The Legislature approved a midyear budget-balancing plan in January to close a $1.6 billion shortfall, but deteriorating revenue collections have produced the expectation of the new shortfall at the June 30 end of the fiscal year.

Republican leaders unveiled the plan Tuesday and pressed for approval Wednesday, citing the state’s lack of cash to pay a $330 million payment to K-12 schools Friday.

The plan would use $250 million of federal stimulus money to replace state dollars for K-12 schools. It would postpone $100 million of university funding and $300 million in K-12 school funding into the next fiscal year.

State repayment of the postponed K-12 funding – nearly all of the payment scheduled for Friday – would then be reduced several months from now by amounts lawmakers say districts have saved above state limits.

Republican supporters said that taking the school districts’ money targets dollars that the districts’ legally can’t have or use and that sweeping it up will help avoid cuts in state aid for schools.

“If there was ever a time to reach into excess funds, this is the time to do so,” said Sen. Russell Pearce, R-Mesa. “They’re going to be used to offset reductions for the classroom.”

Most Democrats protested the grab, saying it could force school districts to raise local property taxes to recoup money grabbed by the state.

“This a backdoor tax increase,” said Sen. Rebecca Rios, D-Apache Junction.

Amounts to be taken from districts have yet to be determined but estimates range up to $300 million.

Even with enactment of the new plan, lawmakers still face the challenge of closing a $3 billion shortfall to produce a budget for the fiscal year that starts July 1.

By approving so-called “rollovers” of funding obligations into the next fiscal year, Republican lawmakers are following a course of using virtually any and all budget maneuvers before resorting to a temporary tax increase proposed by Brewer.

“What we’re doing here today is fighting off that potential tax increase,” said Sen. John Huppenthal, R-Chandler.

Brewer has exclusive authority to decide spending of most of the state’s stimulus money, and the $250 million allotment for the current fiscal year represents a compromise with legislators who wanted her to use more.

Some legislators said they wished Brewer used stimulus cash to close the current year’s entire shortfall, but Brewer originally wanted to use only $200 million so more could be saved for the next two fiscal years.

“She did compromise,” said Brewer spokesman Paul Senseman.

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