PHOENIX - Republican legislative leaders released a proposed state budget Thursday that would reduce income and property taxes over two years and provide new spending for education, border security and highway construction.
The Republicans' nearly $9.9 billion budget proposal for the 2006-2007 fiscal year beginning July 1 sharply contrasts in many respects with priorities in Democratic Gov. Janet Napolitano's own proposed budget of approximately $10.2 billion.
Along with the tax cuts, key elements of the Republican proposal include a $345 million outlay to accelerate highway construction, $160 million over two years for border security and other expenses related to illegal immigration, and a $103 million financing package to expand Arizona State University-Polytechnic.
Also, the Republican plan would revamp state funding for elementary schools by providing more dollars but dropping a mandate to spend some of that money on all-day kindergarten. And a new school-choice tax credit for donations for private school tuition grants would be doubled to $10 million from the current $5 million.
"We feel good about how it addresses the priorities of our state," said Senate President Ken Bennett, R-Prescott.
After weeks of closed-door talks among themselves, the GOP leaders presented their budget proposal to small groups of rank-and-file House and Senate Republicans to gauge support.
Bennett and House Speaker Jim Weiers, R-Phoenix, later said some changes likely will be made based on fellow Republican lawmakers' feedback. "This is the first pass," Weiers said.
The GOP-led Legislature could take formal action on the budget proposal next week, but Bennett and Weiers said they first plan to present it to Napolitano and leaders of the Legislature's Democratic minority in hopes of forging an agreement.
Napolitano aides declined immediate comment on the Republican proposal.
The Republicans previously requested and received Napolitano's budget priorities, and the GOP proposal released Thursday included some items but not others. Still others appeared in reduced or otherwise altered forms.
The $497 million, two-year tax-relief package includes 5 percent cuts in the state personal income tax in both this year and next. Savings to taxpayers - and revenue lost to the state - would amount to $155.5 million in taxes owed this year and an additional $178.3 million on top of that next year.
In the tax package's other major element, a property tax that helps pay for public schools would be reduced by a third in 2007 and again by a third in 2008 at a cost of $72 million next year and an additional $79 million in the next year. The so-called "county equalization" now costs $86 annually for a $200,000 home.
The package includes a provision replacing state revenue-sharing money local governments would lose in the 2008-09 fiscal year because of the income tax cut. Similarly, the state would make up the money for schools that otherwise would be lost due to the property tax reduction.
Republicans, who lowered their tax-cut request from three years, contend the state can afford to provide relief for taxpayers now that the state's fiscal picture has recovered from hard times earlier this decade and that tax cuts will help spur the state's economy.
Napolitano has suggested several small, targeted tax measures but resisted general tax cuts, saying the state has unmet spending needs in education and other areas and shouldn't risk undercutting its fiscal foundation.
On education, the Republicans' proposal would create a new $143 million pot of money for elementary schools. They'd get that money by taking $38 million now provided for all-day kindergarten to some school districts and adding $105 million Napolitano had sought to take all-day kindergarten statewide.
Under the Republicans' proposal, school districts could spend their shares of the new money - provided as extra dollars for each student in grades K-3 - as they deem fit.
Some school districts now use other money to pay for all-day kindergarten, according to Senate Majority Leader Tim Bee, R-Tucson. "School boards would have the opportunity to decide what programs to implement," he said. "School members are elected. They represent the constituents of their districts and they respond to input."
Napolitano won approval of partial state funding of all-day kindergarten after a hard fight in the Legislature two years ago, and the program was expanded last year to include additional school districts.
The Republicans' budget proposal did not include $91 million which Napolitano requested to raise all K-12 public school teachers' annual pay to at least $30,000, provide all teachers with an $800 raise and cover teachers' increased contributions for retirement.
Arizona Education Association President John Wright criticized the Republicans' approach, saying the failure to back Napolitano's teacher pay proposal disproves previous Republican statements of support for salary increases when the state has the money. "They do have the money and it appears they're choosing to not make that a priority," Wright said.
On the Net:
Arizona Legislature: www.azleg.gov