PHOENIX — State officials say three environmentally contaminated mines in Arizona would get a $23 million cleanup as part of a settlement with the mining company that owns them.

The deal is subject to the approval of a Texas court overseeing the bankruptcy reorganization of Asarco LLC, the Tucson-based company that owns the mining sites.

State officials say $20 million would fund the cleanup and revegetation of the Sacaton Mine, a 3,000-acre open-pit copper mine near Casa Grande that was abandoned in the 1980s.

About $3 million would pay for cleaning and restoring the 600-acre Salero and 335-acre Trench mines outside Patagonia in southern Arizona. Both mines were abandoned about a century ago.

The deal is part of a $260 million, 11-state settlement with Asarco to resolve ongoing environmental disputes at 17 mines.

“Resolution of these environmental claims is part of our effort to meet our obligations to our creditors, reorient ourselves and emerge from bankruptcy,” said Doug McAlister, Asarco’s general counsel.

Environmental regulators worry that hazardous chemicals left in mine sites will leach into the soil and groundwater.

Crews will use fresh rock or soil to cover piles of waste from mine operations and allow vegetation to grow. Officials expect the move to direct the flow of rainwater around the waste.

Officials don’t think the groundwater has been contaminated at any of Arizona’s three sites, but the settlement includes money for groundwater cleanup if it is needed, said Patrick Cunningham, acting director of the Arizona Department of Environmental Quality.

Cleanup could take up to 30 years if groundwater is found to be contaminated, Cunningham said.

Also as part of the settlement, Arizona would get about four miles of riparian habitat along the Lower San Pedro River south of Hayden and Winkelman in Gila County. The land, which has not been mined, is valued between $3 million and $4 million.

Officials say the property exchange would compensate for damage to Mineral Creek and the Gila River caused by releases from Ray Mine and the Hayden Facility, two active Asarco operations nearby.

The riparian habitat is home to many migratory birds, nesting raptors, waterfowl species and the endangered southwestern willow flycatcher. The settlement includes about $4 million for land management.

“The San Pedro River is one of the most important riparian areas in the state, and perhaps the most threatened,” said Mark Winkleman, commissioner of the State Land Department, which owns much of the land surrounding the river. “This settlement will help preserve it, and that is of the utmost importance to this state.”

PHOENIX — Republican legislative leaders have set the stage for Senate committee consideration Wednesday of a new budget proposal that includes privatizing several state prisons to help close a big revenue shortfall.

The Senate on Tuesday suspended rules in order to allow short-notice consideration of the proposal.

Leader said it’s a revised version of a plan endorsed recently by a House committee and is a joint proposal by House and Senate leaders hoping to intensify negotiations with Gov. Jan Brewer.

Senate President Bob Burns, R-Peoria, previously had said he wouldn’t have the Appropriations Committee consider a budget proposal unless he had enough votes in the full chamber to assure passage.

He indicated that’s not the case now.

“I changed my mind based on the fact that time is slipping away from us. I think we have to make some changes in our plans of actions,” Burns said.

Senate Appropriations Chairman Russell Pearce said the privatization proposal calls for transferring operations of several prisons to a private company in exchange for an upfront payment of $100 million to $200 million.

The Mesa Republican said the state would continue oversight of the prisons and save money on operations. State employees working at the prisons could transfer to other state prisons or find work with the new operators, Pearce said.

Pearce said other elements of the plan include cuts in funding for K-12 schools and having the state grab some vehicle license tax revenues now going to local governments. The local governments then would be authorized to use some of their impact-fee money to backfill for the lost money from the vehicle license tax, Pearce said.

Arizona’s tax collections have been hammered by the recession and the collapse of the housing industry, and the state faces a projected $3 billion shortfall in the fiscal year that begins July 1. Depending on what spending cuts are made, the budget could total approximately $10 billion.

Sen. Jay Tibshraeny, R-Chandler, said the impact-fee proposal is fraught with legal and practical problems. Cities and towns are now preparing their budgets and need to know what money they will have, said Tibshraeny, a former mayor of Chandler.

PHOENIX – A logjam of bills on topics ranging from abortion to transportation has built up as the Arizona Legislature slogs through one of its most unusual sessions.

And there could be splinters aplenty when the logjam eventually breaks – whenever that is.

Trying to solve a state budget crisis has had lawmakers tied up in knots for months, and that work is incomplete.

The focus on that paramount problem has been both natural – the size of Arizona’s $3 billion shortfall is one of the biggest in the nation proportionally to the overall size of the state budget – and forced.

Insisting that lawmakers approve the budget first, Senate President Bob Burns placed an embargo on formal consideration of nonbudget bills when the session started in January. That has placed roughly 500 Senate bills in limbo, not even being assigned to committees, let alone being considered by committees or the full Senate.

Burns, R-Peoria, has said the Senate can start considering bills once the Legislature passes the budget.

Meanwhile, the House has been considering nonbudget bills throughout the session, but at an unmistakably slower place than usual.

While hundreds of bills cleared committees, it wasn’t until Wednesday that the House took the first formal votes on nonbudget bills other than a sweeping abortion measure approved earlier this spring.

Bills that went to the Senate on Wednesday – to sit for now, with no action expected for weeks – included measures on health insurance, students’ religious liberties and concealed weapons permits.

That was one day after the House Appropriations Committee endorsed a Republican budget-balancing plan.

“We think the time has come to start moving Arizona’s business forward and that’s what we’re going to do,” said House Majority Whip Andy Tobin, R-Paulden.

But now the House Republicans’ budget proposal and those of others are the subject of negotiations between legislative leaders and Republican Gov. Jan Brewer. It’s not known when they’ll bear fruit, but the effective deadline is June 30, the last day of the current fiscal year.

So what will happen when the budget is approved?

“I don’t know,” because it largely depends on timing, said Sen. John Huppenthal, a Chandler Republican who has served in the Legislature since 1993. “We could get this thing moving in a week or we could be here until July.”

However, he and other lawmakers say there will have to be a dramatic winnowing of the number of bills once they can be considered.

Some measures likely to make the cut will be those that could implement goals set by the “majority program” that each chamber’s Republican majority set for the session.

Those topics include property taxes, speed cameras, abortion, school choice, regulatory reform, government privatization, health coverage, selection of judges, toll roads and the initiative process.

Other bills moving through the process deal with such high-profile topics as foreclosures, day laborers and fireworks.

However, seemingly humdrum housekeeping bills intended to keep the state government going shouldn’t be ignored, according to several Senate committee chairmen contacted by The Associated Press.

Sen. John Nelson, R-Litchfield Park, said he’s assembling a transportation bill “that has to go because it’s conforming legislation.” For example, one provision would change Arizona law to track federal requirements on commercial driver licenses, Nelson said.

Without it, “everybody that’s driving a commercial vehicle – you can’t get a license,” he said.

Sen. Linda Gray, R-Glendale, said she’ll be pushing a bill to bring the state into compliance with a federal law on foster and adoptive parents.

“Unless we get an extended waiver it would cost the state $148 million if we don’t approve,” the Glendale Republican said in an e-mail.

There could be only a few weeks – instead of months normally – to consider nonbudget bills.

Therefore, supporters of legislation better have it polished and ready to go, said Huppenthal, the Senate’s education committee chairman.

Huppenthal said he has met weekly all session with “stakeholder” groups to wrap numerous proposals into one sweeping education bill that all the groups can support.

“They’ve ground them down and . . . each one of them has things in there that they support,” Huppenthal said.

“I’m not so sure that the (other) members have been polishing their bills.”

Once the logjam breaks, there easily could be unrealistic expectations, tit-for-tat gamesmanship and House vs. Senate misunderstandings if there’s a mad rush to push bills through amid the necessity to prioritize them, said Nelson, a legislator since 2001.

“Leadership is going to have to pull out the important bills that have to go regardless as to whose they are, so that’s going to set up some frustration and then we start saying we’re playing favorites and that kind of stuff,” Nelson said.

“We get down to the first- or second-grade level.”

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Will legislators still be around in June?

There’s no legal barrier to prevent lawmakers from continuing other legislative work once they’ve approved a new state budget before the fiscal year starts July 1.

But practicalities could be a problem for the part-time Legislature.

There’s always a falloff in legislative attendance as sessions slip into June, with lawmakers coming and going for other jobs, family commitments, and even previously planned vacations and conferences.

If enough House and Senate members aren’t on hand, that could make it impossible to pass legislation. That’s because bills must be passed by majorities of each chamber, not just of those lawmakers on hand for a vote.

The Arizona Citizens Defense League, a gun-rights group lobbying for passage of several bills, recently urged its supporters to implore lawmakers to stick around even after a budget is passed. “All it takes is a few legislators to leave and the session is effectively over.”

PHOENIX – A newly formed advocacy coalition on Thursday offered suggestions to Arizona legislators on ways to protect education, health care and social services from spending cuts needed to balance the troubled state budget.

The coalition announced its formation on Thursday and released a menu of dozens of alternatives. They range from tax increases and accounting maneuvers to rehiring laid-off tax collectors and selling off Arizona Lottery revenue for upfront cash.

“We are here talking about hope and possibilities today,” Timothy J. Schmaltz, coordinator of the Protecting Arizona’s Family Coalition, said during a news conference.

Schmaltz’s group is among more than 20 organizations that announced formation of the Arizona Budget Coalition. Other member groups include the Arizona Education Association, the Children’s Action Alliance and the Service Employees International Union.

Arizona’s state budget has been battered by the recession in general and the housing industry’s collapse in particular, with tax collections going down and costs for social services going up.

The state faces a projected $3 billion shortfall in the next budget, and lawmakers have been struggling throughout their current regular session to agree on ways to fill the gap.

A Republican proposal includes spending cuts and raids on special-purpose funds throughout virtually all of state government to help close a projected $3 billion budget shortfall projected for the fiscal year that starts July 1.

House Appropriations Chairman John Kavanagh and other GOP budget-writers argue that the next budget must include significant spending cuts because the state’s budget troubles will continue into the following fiscal year.

If state spending isn’t reduced now, the budget for the 2010-2011 year will be even harder to keep in the black because one-time options will have been used up, Kavanagh contends.

Asked to respond to the Republicans’ assessment on what’s needed, a coalition leader said the group will urge Gov. Jan Brewer and lawmakers “to pick a combination of options that work for both the short term and the long term.”

“Many of those options are far better than the damage to families and our future that come from the alternative – budget cuts – and those are the choices we face,” said Dana Wolfe Naimark, Children’s Action Alliance president. “We have to pick and choose and set our priorities.”

Also Thursday, Brewer reaffirmed her commitment to “all of the components” of the budget approach she announced in March. It included a temporary tax increase, spending cuts, use of federal stimulus money, a large rainy day fund and changes to voter spending mandates.

“Now, more than ever, dramatic steps are necessary to protect our education system, sustain our critical public safety needs, and protect our state’s must vulnerable. Now, more than ever, all five points of my plan are necessary to get the job done, and to return the state of Arizona back to a path of prosperity,” she said.

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Highlights of proposals

Arizona Budget Coalition: Newly formed coalition of 20-plus groups, including two labor unions, the Children’s Action Alliance and the Protecting Arizona’s Family Coalition.

Recommendations: Continue state property tax that is now suspended but proposed for repeal. Levy new property tax for school facilities. Raise corporate income tax. Suspend income tax credits for school contributions. Delay payment of some spending into next fiscal year. Budget for $35 million in revenue from speed cameras. Place nonviolent offenders on home arrest. Sell and lease back some state facilities. Hire laid-off tax collectors and auditors. Use federal stimulus money.

Quote: “The coalition is guided by a belief that a robust state budget for services is not just feasible, but necessary for building a prosperous 21st Century economy for Arizona.”

Web site: http://www.arizonabudgetcoalition.org

Arizona Chamber of Commerce and Industry

A statewide advocacy group for businesses.

Recommendations: Cut state spending. Loosen voter spending mandates. Approve tax cuts with delayed effective dates. Consider expanding off-reservation gambling. Consider a temporary tax increase only as last resort.

Quote: The chamber believes that, under these extraordinary circumstances, certain temporary tax increases, such as an increase to the sales tax, should be considered if all other options have been exhausted and there is no other viable way of closing the deficit.”

Web site: http://www.azchamber.com

Arizona Tax Research Association.

A business-backed advocacy group on tax and fiscal issues.

Recommendations: Adjust only school transportation costs, not basic state aid, for inflation. Cap or phase out local school district property taxes that are outside the public school equalization system but that trigger higher costs for state. Eliminate state funding for kindergarten students who turn 5 before Sept. 1. Eliminate extra funding for “rural” districts. Eliminate state aid for out-of-state university students.

Quote: “ATRA encourages the Legislature and the governor to view the difficult task of reducing spending as an opportunity to also improve the state’s fiscal management.”

Web site: http://www.arizonatax.org

PHOENIX – Arizona State University says a financial aid program that’s being renamed after President Obama will triple the number of recipients from 500 freshmen now to 1,600 during the upcoming fall semester.

The university says the expansion was a response to Obama’s call to produce more college graduates in America. Officials provided details of the expansion Wednesday.

The expansion was first mentioned last month when the university was criticized for not giving an honorary degree to Obama. The president will speak at ASU’s graduation ceremony May 13.

The university had said it wasn’t giving Obama a degree because he didn’t yet have a body of work as president. The school later said it was renaming the expanded aid program after Obama.

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ON THE WEB

Arizona State University: www.asu.edu

But state Rep. Antenori says their efforts could ‘kill’ Rio Nuevo

Supporters of the shelved Tucson Origins mission complex pleaded for 45 minutes Monday to the Rio Nuevo board to revive plans to build the Mission San Agustín and Mission Gardens.

At the same meeting, state Rep. Frank Antenori said Rio Nuevo was dead in the Legislature unless the city sticks exclusively with Tucson Convention Center improvements.

Meanwhile, the Rio Nuevo Multipurpose Facilities District Board put off a decision on a master development agreement to design and build a Tucson Convention Center hotel, and the City Council on Tuesday is expected to delay its decision until May 12 for the same agreement with Garfield Traub Development to build the 525-room, 25-story Sheraton Tucson Convention Center Hotel.

Seven members of Friends of Tucson’s Birthplace reminded the board that Proposition 400, which created Rio Nuevo in 1999, focused predominantly on historic and cultural features on the West Side, not on a convention center hotel, which has come to the forefront in recent months.

“When the Legislature dictated, in their wisdom, that we need a hotel, convention center and arena, I feel betrayed,” said Velia Jimenez Morelos, who has lived near the Origins site for 40 years. “The history and culture component made a big splash in my life (in 2001). About eight years later, I am asking, what happened to all the promises you made to us?”

Gene Einfrank and former Tucson Unified School District Superintendent Roger Pfeuffer in the past year moved into houses in the upscale Mercado District of Menlo Park with the belief that museums and a reconstructed mission would soon be their neighbors. The City Council in February put the entire West Side project on hold to focus on the TCC hotel and expansion.

“For now, we feel a little foolish, like we’ve been taken for a ride, frankly, a little outraged,” Einfrank said.

The Friends presented to the Rio Nuevo board a petition with more than 1,000 signatures asking for the Mission Gardens to be completed and a timetable established to build the mission.

Antenori warned the Friends, as well as the board and City Council, to hold off on any Origins demands while he and Sen. Jonathan Paton work to save Rio Nuevo in the Legislature with a budget amendment that calls for the Legislature to expand and appoint a new Rio Nuevo board and prioritize the TCC projects because they generate money.

“If any of you make an effort to undermine that, the Legislature will surely kill Rio Nuevo,” said Antenori, a Tucson Republican. “The only hope we have left is to sit tight.”

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.

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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:

Numbers:

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.

Provisions:

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.

Arizona’s prime tourism season was better for the state’s Indian casinos than was the holiday season, which brought a record drop in casino revenue sharing for the state.

The 15 gaming tribes sent 9.4 percent less shared revenue from casinos to the Arizona Department of Gaming for the January-to-March period compared to last year. Still, the spring decline was better than the 16.1 percent drop for the October-to-December quarter, according to department statistics.

The tribes sent $22.1 million to the Gaming Department for the first quarter, a slide from $24.4 million the same quarter last year. First-quarter shares were $24.6 million in 2007 and $22.4 million in 2006.

The past three quarters have had the three biggest year-to-year cash declines in casino revenue sharing since the Arizona Tribal-State Gaming Compact was put in place in 2003. The compact allowed tribes to add blackjack tables and more slot machines in exchange for opening casino books to state audits and sharing 1 percent to 8 percent of gambling revenues.

Revenue sharing has declined six straight quarters since the start of 2008. Before that, the amount shared had increased each of the 18 quarters since revenue sharing started, according to Gaming Department statistics.

Tribes have shared $505 million with the state in six years, with most of the money distributed to schools, trauma centers, wildlife conservation, tourism agencies and gambling-problem programs.

Mark Brnovich, the new Gaming Department director, said casinos, like other businesses, are not immune to economic crises.

“Nevertheless, their operations continue to generate significant funding for valuable programs,” Brnovich’s news release read. “Current decline in tribal gaming revenue in Arizona is only about half of what is being reported at tourist destinations such as Las Vegas.”

Gamblers indeed are loosening the purse strings at Casino del Sol and Casino of the Sun, said Wendell Long, chief executive of the Pascua Yaqui Gaming Enterprise Division.

“Although we are not happy with 9.4 percent, at least we’re fortunate not to see the 20 percent decreases in Atlantic City and Las Vegas,” Long said.

The Pascua Yaqui casinos have held steady with about 1,200 employees through the last three quarters.

“The tribe is committed not to lay off any people and we’re not going to lay anybody off,” Long said.

The 23 Indian casinos in Arizona operate a total of 14,654 slots, 212 poker tables and 259 blackjack tables. The Desert Diamond Casino on Nogales Highway and Harrah’s Ak-Chin Casino in Maricopa have the most slot machines in Arizona: 1,089.

The two Pascua Yaqui- and three Tohono O’odham-operated casinos in the Tucson area have a combined 3,385 slot machines, 43 poker tables and 47 blackjack tables, according to Gaming Department statistics.

Tribes pay the state 1 percent of the first $25 million in revenue, 3 percent of the next $50 million, 6 percent of the subsequent $25 million and 8 percent when cumulative revenue during a year exceeds $100 million.

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How gaming revenue is distributed

The Arizona Department of Gaming distributed tribal casino revenue-sharing funds for January through March as follows:

• $2 million stayed with the Gaming Department to cover administrative and regulatory expenses

• $442,055 went for problem-gambling education, treatment and prevention

• $11 million went to the instructional-improvement fund for schools

• $5.5 million went to the trauma and emergency services fund

• $1.6 million went to the Arizona wildlife conservation fund

• $1.6 million went to the tourism fund

Source: Arizona Department of Gaming

PHOENIX – Preliminary April tax figures indicate the state’s revenue shortfall for the fiscal year will be significantly bigger than anticipated, according to a new report that cited the worsening economy.

Legislative budget analysts said a new budget shortfall that was most recently estimated at $487 million could grow by between $200 million and $300 million by the fiscal year’s June 30 end.

Though Gov. Jan Brewer and lawmakers can use even more federal stimulus money than already planned to keep the budget in the black, that would mean those dollars aren’t available to help balance the next two budgets. Each now includes deep pools of red ink.

Legislators in January approved spending cuts, raids on special-purpose funds and use of stimulus money to close a projected $1.6 billion shortfall in the current budget. And lawmakers have planned to spend an additional nearly $500 million of stimulus money to cover the current year’s new gap.

Legislators have been struggling for months to craft a new budget for the fiscal year that starts July 1, and the grimmer revenue picture will make that work harder.

The preliminary April results include 30 percent more in tax refunds issued in April from a year earlier and 30 percent less in payments received, the budget staff said.

A state appellate court on Thursday lifted a lower court’s order blocking the state from implementing budget cuts in services for thousands of developmentally disabled people. A three-judge Court of Appeals panel unanimously vacated a preliminary injunction issued in March by Judge Joseph B. Heilman of Maricopa County Superior Court.

Advocates for the developmentally disabled filed their suit Feb. 27, challenging the main law in a January budget-balancing package that closed a $1.6 billion budget shortfall.

Geanna Gute, a longtime renter in the Phoenix area, recently bought a home in Buckeye for $75,000 with the help of an USDA loan.

The same government agency known for certifying the quality of hamburger and steak is becoming a prime force in the Arizona housing market.

The U.S. Department of Agriculture has guaranteed mortgage loans for many years, much like the Federal Housing Administration and Department of Veterans Affairs, but this year the value of Arizona loans guaranteed by the USDA is on pace to quadruple compared with 2008.

While USDA home loans are not for everyone – there are both geographic and household-income restrictions – acting USDA Arizona Director Ernie Wetherbee said the federal agency’s loan-guarantee program is available to more people than ever, thanks to a recent boost in income limits.

As of April 20, the maximum allowable yearly income for USDA loan recipients in the Valley increased to $75,750, from $51,000.

The limit apples to families of up to four people, Wetherbee said, and larger families can have a combined income of up to $100,000.

Buckeye newcomer Geanna Gute was approved for a USDA loan recently and said she had never imagined owning a home would be so affordable.

Gute, a 58-year-old bill collector who had been a longtime renter in the Valley, learned about USDA loans from a local radio talk show on KFNN hosted by Sun State Home Loans broker Mike Metz.

She contacted Metz, and within weeks she had purchased a pristine 1,860-square-foot bank-owned home, built in 2005, for $75,000. It had been appraised at $200,000 in October, she added.

Gute said her monthly payment is $650, and the only thing she had to pay for up front was a re-shoot of some inspection-related photos.

“I had to pay $60 – that’s all I paid,” she said.

The USDA guarantee program is similar to the FHA’s in that private banks still provide the loans, and the government promises to pay off the loan if the borrower defaults.

The USDA also has a direct-lending program in which it acts as the lender, but the annual household-income requirements are lower: $52,700 to $69,550, depending on the number of household members.

Unlike FHA loans, which require a 3.5 percent down payment, USDA-guaranteed loans require no down payment, similar to VA loans.

Despite the lack of a required down payment, USDA loans historically have the lowest default rate among government-insured loans. The current first-year default rate for USDA loans is 2.5 percent, compared with 7.5 percent for VA and 10 percent for FHA.

“Our program has been around for years, and it has never changed,” Wetherbee said. “It’s a good product, and it’s being used as intended.”

Angelica Murrieta, a Realtor with Dan Schwartz Realty in Phoenix who specializes in USDA loan purchases, said the lesser-known federal-guarantee program has provided a shot in the arm to outlying areas of the Valley, where an oversupply of speculative homes and abundance of foreclosures have lowered home values significantly.

Many home buyers are still unfamiliar with USDA loans, Murrieta said, adding that she is quick to recommend them to buyers who qualify and don’t mind living in a more remote location.

Although the loans are restricted to “rural areas,” the definition includes Buckeye, Queen Creek and most of suburban Pinal County. This is probably the last year in which some of those communities will qualify for USDA loans, Wetherbee said, because their status as rural is based on 2000 U.S. Census data, and there will be another census next year.

Home buyers and lenders turned away from federally insured loans during the housing boom that peaked near the beginning of 2006, Wetherbee said.

“This was not the road of least resistance, because these are fully documented loans,” he said.

Now that many of those borrowers are losing their homes to foreclosure and banks are reluctant to risk money on new mortgages, nearly everyone has flocked back to the security of a government guarantee.

As a result, the loan volume and value of USDA-backed loans have increased exponentially in the past year.

In the federal agency’s entire fiscal 2007, which runs from Oct. 1 through Sept. 30, it guaranteed 123 mortgages in Arizona with a combined value of $19 million. The following year, it backed 629 home loans worth a total of $97 million.

Since Oct. 1, the USDA has guaranteed 1,366 mortgages totaling $176 million, and Wetherbee said he doesn’t anticipate any federal-budget restrictions that would prevent the agency from continuing to approve loans at its current pace.

“We basically just go back and ask for more as needed,” he said.

PHOENIX – Republican legislative leaders’ budget-balancing plan includes “revenue enhancements” sweeping hundreds of millions of dollars from school districts and municipalities into the state general fund.

An outline released late Monday of the “joint draft budget proposal” said it includes sweeping $300 million from school district accounts deemed to have “excess cash balances.” And it would require “rebates” of $210 million of municipal impact fees paid on new development, including new homes.

The Republican legislative leaders also called for using roughly $1 billion of federal stimulus money and a total of $1 billion from new budget cuts and dipping into special-purpose funds.

In struggling for months to come up with a plan to close a 2009-2010 shortfall now projected at roughly $3 billion, the leaders had already presumed repeating some $500 million of budget cuts made in the current fiscal year’s budget.

The shortfall estimate of roughly $3 billion is based on spending of $11 billion. But spending won’t total that much because some spending will be reduced to close the budget gap.

The leaders’ proposed use of the $210 million of municipality impact-fee money was called a “one-time revenue budget option.”

It’s better to use the municipal money than to raise taxes, House Speaker, Kirk Adams, R-Mesa, said in a statement announcing the draft proposal. “These funds exist, in part, because of taxes imposed on citizens.”

Saying it would hurt the economy, Adams and other Republican legislative leaders have rejected Republican Gov. Jan Brewer’s proposal for a temporary tax increase to help balance the budget.

Ken Strobeck, executive director, the League of Arizona Cities and Towns, said the lawmakers’ impact-fee idea would be a “double-loser” because the fees won’t be available to pay for intended infrastructure improvements. Also, some of the money has already been spent and wouldn’t be available to be swept by the state, he said.

Similarly, school groups have said the money proposed to be swept from their “carry forward” accounts already is spoken for in many instances due to contracts or other commitments.

School districts are allowed to carry over into the next fiscal year up to 4 percent of the operating budget.

The outline of the proposal also stated that it includes a smaller lump sum reduction in K-12 school funding and continuation of the KidsCare health care program for children.

House Majority Whip Andy Tobin, R-Paulden, said it includes restoring at least some university funding cuts in order to preserve the state’s eligibility for stimulus funding for education.

The House and Senate Appropriations Committees scheduled a joint special meeting Tuesday afternoon to discuss using the municipal money.

Life has become a little better for unemployed Arizonans, but the state still is not doing all it should to help those without a job.

Friday, Gov. Jan Brewer signed legislation giving at least 13 more weeks of unemployment benefits to Arizonans who have been laid off.

But the move is hardly a gesture of generosity from the state. All of the money to extend benefits to 72 weeks is coming from the federal government as part of the stimulus bill.

Seven more weeks could be added if Arizona’s unemployment rate hits 8 percent. At the end of March, it stood at 7.8 percent.

Brewer signed the legislation after it was passed by the Legislature – with lawmakers griping about federal mandates and requirements.

For example, the federal stimulus package also includes “modernization” changes, providing a longer period of unemployment benefits for laid-off workers who are receiving education or training for a new vocation. That change also would make people eligible for benefits even if their former job was only part time.

But those additional benefits are paid by the federal government only as long as the stimulus money lasts – then the state must continue the benefits. That was a commitment the Legislature was unwilling to make – an unfortunate decision. Accepting the money would have benefitted many job-seeking Arizonans.

Arizona also is failing to process unemployment benefits in a timely manner – despite adding staff and having employees working nights and weekends.

Employees for the state Department of Economic Security are simply overwhelmed. In one recent week, DES received 13,722 claims for new and extended unemployment benefits – on top of 12,356 the week before. More than 110,000 Arizonans are receiving unemployment benefits, up from 28,000 in January 2008.

The William E. Morris Institute for Justice, a Phoenix group that represents low-income residents, filed a federal suit last month to have the state unemployment process speeded up. It acted on behalf of a woman who had been waiting five months for benefits and a man who ended up in a homeless shelter after waiting unsuccessfully for 10 weeks.

The suit was dropped after both received their benefits. But it indicates deep problems in the state’s ability to respond to this unprecedented economic crisis.

The good news for Arizonans: They now are eligible for a longer period of unemployment benefits. The bad news: They still face daunting challenges in getting the benefits started.

PHOENIX – The state budget crisis threatens a program that helps Arizona farmers prevent contamination in lettuce, spinach and other leafy greens, advocates say.

The Arizona Leafy Green Products Shipper Marketing Agreement, also known as Arizona Leafy Greens, is administered by the Arizona Department of Agriculture. It started in September 2007 after California experienced two E. coli outbreaks traced to lettuce and spinach.

“We take food safety very seriously as an industry,” said C.R. Waters, a Yuma farmer who serves as the program’s chairman.

Funded by voluntary assessments to member growers and shippers, the program, which took in about $78,000 this year, sets safety standards for growing leafy greens and brings inspectors from California to assess how farms are meeting those standards.

Waters said members of Arizona Leafy Greens look with worry at fund sweeps lawmakers have made to address the state’s budget deficit. Those sweeps already have cut money from the Agriculture Department’s Iceberg Lettuce Research Council, Grain Research and Promotion Council and Arizona Citrus Research Council, which also are funded by growers.

“The fund sweeps for the 2010 and future budgets are the biggest threat to the viability of the program,” Waters said. “People will be hesitant to put money into a fund if it’s going to be used for something other than its intended purpose.”

Arizona growers provide 75 percent of the leafy green produce consumed in the United States and Canada from November through March. The $1 billion industry employs about 20,000 workers.

Arizona Leafy Greens helps ensure quality and safety by making sure animals don’t get into or feed too close to fields and by monitoring water and soil.

Waters said that in addition to protecting the public, Arizona Leafy Greens helps maintain confidence in the food supply and protects the agriculture industry.

“If there’s an outbreak, people will just quit buying that product,” Waters said.

Kurt Nolte, director of the Yuma County Cooperative Extension, operated by the University of Arizona, said safety standards set by Arizona Leafy Greens protect consumers. He said that sweeping the funds would be unfortunate because the program gets its money from the agriculture industry.

“This is not taxpayer money that might get swept,” Nolte said.

Will Rousseau, chairman of Arizona Leafy Greens Communications Committee, said a fund sweep would be nothing more than an indirect tax increase.

“If the funds were swept away, the industry would be forced to replenish the funds with the risk they would be swept away again,” he said.

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Arizona Leafy Greens

• Full Name: Arizona Leafy Green Products Shipper Marketing Agreement

• Focus: Industry program striving for safety in production of lettuce, spinach and other leafy greens.

• Components: Sets standards for safe productions, ensured through audits by government-certified inspectors.

• Launched in September 2007 after two E. coli outbreaks traced to leafy greens grown in California.

• Administered By: Arizona Department of Agriculture

• Funding: Assessments to member growers and shippers – about $78,000 this year.

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On the Web

Arizona Leafy Greens:

www.azlgma.gov

Gov. Jan Brewer's tax reform plan includes unspecified pro-growth tax changes to be phased in after a temporary increase in an unspecified tax carries us past the present valley of woe.

The main focus among state government policymakers has been how to pay bills next year.

There are, however, side discussions taking place over how to construct a better tax system.

In fact, part of Gov. Jan Brewer’s plan includes pro-growth tax changes (unspecified) to be phased in after a temporary tax increase (also unspecified) carries us past the present valley of woe.

So, what would a better tax system look like? To answer that question, you first have to ask: What do you want a tax system to do? And the right answer to that question should be: Raise necessary government revenues while doing the least to impede private- sector growth.

Dr. Richard Vedder has done the most thorough research over the years on the relationship between state tax structures and economic growth. He’s looked at four decades of data.

His conclusions have been consistent and statistically robust: States cutting taxes grow faster than states raising them. States relying on consumption taxes grow faster than those that rely on income or property taxes.

Arizona actually already has a pretty good tax system in this regard. Government revenue growth is usually pretty healthy.

So, contrary to all the hand-wringing, there’s not a lot of room for improvement. Any significant gains would likely require big reforms, such as advocated recently by Dr. Art Laffer and his associates in a paper sponsored by the Goldwater Institute and the Arizona Free Enterprise Club.

Laffer proposes that the state’s individual income tax be replaced by a flat-rate of 3.34 percent. The only deductions would be for charitable donations and housing costs, including rents. He also would replace the current corporate income tax and state sales tax with a business value added tax of the same rate.

Lower rates on broader bases are more conducive to economic growth. The value added approach eliminates some of the objection to expanding the sales tax base, since it would also take the place of the corporate income tax, which all businesses already pay.

Adding rent as a deduction ameliorates some of the regressive burden shift that usually results from flat-tax proposals.

Big changes, however, are very difficult politically. The Arizona Chamber recently released a nibble-around-the-edges approach that fleshes out the governor’s general proposition.

The chamber said it could support a temporary sales tax increase if accompanied by permanent elimination of the state property tax and cuts in corporate income and capital gains taxation.

This is typical big business shortsightedness: Increases for others to fund reductions for us. But there is also some rationale to it.

The only tax Arizona has that is actually high by national standards is the business property tax. And Arizona’s corporate income tax is high compared with the state’s individual rate and the corporate rate of nearby states.

Moreover, capital gains and corporate income taxes are the state’s most volatile revenue sources. Reducing reliance on them would add an increment, albeit minor, of stability.

Some want to use the tax code to implement their view of social justice. So, House Democrats want to increase the income tax on affluent Arizonans.

That, however, flies in the face of the Vedder findings. Over the past decade, the economies of nine states that don’t impose individual income taxes grew 76 percent on average, while economies of the nine with the highest marginal rates grew 57 percent on average.

In reality, however, Arizona’s tax system just isn’t that broke. It can be improved, but it doesn’t really need to be fixed.

Robert Robb, an Arizona Republic columnist, writes about public policy and politics. E-mail: robert.robb@arizonarepublic.com

PHOENIX — Arizona legislators have completed action on bills to use federal money to provide laid-off Arizonans with at least 13 more weeks of eligibility for unemployment benefits and put Arizona back in line to receive $1.6 billion of stimulus cash.

The Senate approved the bills Wednesday, and House approvals Thursday send them to Gov. Jan Brewer.

The unemployment bill would use federal stimulus money to raise Arizona’s total benefits to 72 weeks. Seven more weeks could be added if Arizona’s unemployment rate exceeds 8 percent.

The other bill reverses a procedural change that the state made last year for the state’s health care program for the poor. That reversal allow Arizona to qualify for additional Medicaid funding considered vital to keep the state budget in the black.