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

The Tucson Citizen
Monday, May 4, 2009
The Associated Press

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.