Ariz. lawmakers work on deal to fix $2B budget gap

Arizona legislators are planning a mid-November special session to chip away at the state's estimated $2 billion budget shortfall and keep agencies' doors open by reviving spending cuts and other provisions vetoed by Gov. Jan Brewer.

Details are being worked out as House and Senate leaders poll rank-and-file majority Republicans, but the package aims to restore spending cuts and budget provisions vetoed Sept. 4 by Brewer, said House Majority Leader John McComish, R-Phoenix.

"I'll be surprised if it doesn't happen because I think we have agreement," McComish said.

The spending cuts would include funding for education and social services, Brewer and McComish said separately Wednesday.

McComish declined to discuss specifics before the package is locked in, but cuts vetoed by Brewer included most of an annual inflation adjustment for K-12 public schools and annual funding for school purchases of computers, textbooks and other equipment. Education groups had previously warned school officials that those vetoed cuts could be restored.

Brewer said she now believes additional spending cuts are necessary because tax collections continue to drop and lawmakers did not vote to send her proposal for a temporary sales tax increase to voters.

"When I did the vetoes, I was hoping that we would turn right around and address that issue," she said.

McComish said the package would total between $450 million and $500 million, including roughly $300 million of spending cuts and $150 million of other changes.

Some of the vetoed provisions, particularly funding shifts to provide money for agencies' operations, are considered noncontroversial, but they were included in a bill that Brewer vetoed to kill the repeal of the state property tax.

Brewer said she would call the special session so lawmakers can make "significant progress" in closing the shortfall.

"We have met, and we have agreed that we need to go in and take a bite of the apple," Brewer said.

The budget has roughly $10.1 billion of state spending, including $1.1 billion funded by federal stimulus dollars. Before being augmented by the federal money, borrowing and other maneuvers, regular state tax collections provide only $6.4 billion.

Brewer said lawmakers could do more work on the shortfall during a second special session and during the 2010 regular session, which begins in January. She didn't elaborate on what they should do beyond the package currently under development, except to continue to press for her sales tax proposal.

The 710-employee Department of Revenue, the state's tax-collection agency, has said its current appropriation will run out in January and that it would have to close down by February if it doesn't get the vetoed funding, which was a shift of money from unclaimed property.

State Senate President Bob Burns, R-Peoria, said the sales tax should be considered separately from spending cuts. The tax referral could draw more support that way, he told radio station KJZZ.