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The Associated Press March 11, 2011, 5:50PM ET

GOP lawmakers eye additional Arizona budget cuts

The Arizona Legislature's majority Republicans are preparing a budget plan that includes deeper cuts in education and other services than those proposed by Republican Gov. Jan Brewer, even as she signals a reluctance to go that far.

Brewer's January budget proposal included roughly $1 billion in spending reductions to Medicaid and other services to close nearly all of a shortfall that she projected at $1.1 billion in the next fiscal year.

But her proposal also includes substantial borrowing to close most of the current budget's shortfall. Lawmakers said including more spending cuts than Brewer proposed in the next budget would help to start putting the state on sounder footing in the fourth year of a continuing fiscal crisis.

That has lawmakers firming up proposals for roughly $600 million in additional spending cuts, including $200 million from K-12 education. Other cuts would come in social services, and reach down to local governments.

The developing plan apparently would shift $150 million of state costs to counties, Maricopa County officials said. They said that would force cancellation of a 911 emergency call center and hurt law enforcement operations in their county.

"The bottom line is we're looking everywhere," said Senate Appropriations Committee Chairman Andy Biggs. He declined to discuss specific potential cuts.

The target of $600 million in additional budget cuts previously was reported by The Arizona Republic.

A $200 million reduction in K-12 school funding amounts to roughly $200 per student, or about 4 percent of the state's per-student funding, said Chuck Essigs, a veteran lobbyist for school business officials.

House Appropriations Chairman John Kavanagh said lawmakers would try to aim the contemplated $200 million reduction in education funding at non-classroom funding as much as possible.

Arizona School Boards Association lobbyist Janice Palmer said she was encouraged that Brewer defended education funding during a speech to a Mesa civic group.

"Certainly education is my priority. I hope that it is the priority of the Legislature," Brewer said Wednesday. "I will pledge to you that I will always fight hard for education."

Her comments followed weeks of closed-door budget talks.

"There had kind of been a vacuum about a budget," Palmer said. "It re-established the budget she put out in January and that she hasn't moved from that point, and that in order for a budget to be acceptable that it has to make (only) minimal cuts to education."

Kavanagh and Biggs stressed that preliminary talks with Brewer's staff have been productive and that much of their emerging plan is based on her proposal.

But they also said they and fellow Republicans are serious about making more spending cuts to help reduce a budgetary "cliff" that the state will face in the 2013-2014 fiscal year.

"Cut now or cut later," Kavanagh said. "Whatever cuts we make now, we also get the savings the next year."

The 2013-2014 fiscal year is when the state will lose revenue from the temporary sales tax approved by voters last May. It's also when the state faces the prospect of a bulge of new Medicaid costs from increased eligibility under the federal health overhaul, and the end of a two-year eligibility suspension proposed by Brewer for the next budget.

Kavanagh and Biggs said Medicaid is a wild card in the overall budget picture.

Brewer is currently revisiting her January budget proposal for a two-year suspension of Medicaid health care coverage for about a fifth of the Arizona Health Care Cost Containment System's enrollment of 1.3 million low-income people.

The latest outline of that proposal would suspend coverage of approximately 245,000 low-income adults, but Brewer recently said she's trying to find ways to reduce the impact.

Any changes she would make would have to be included in an application that the state must file by March 31 for reauthorization of AHCCCS.

She hasn't signaled what changes she might make, but the Arizona Hospital and Healthcare Association is proposing a temporary assessment on the health care industry to raise money to avoid at least part of the eligibility rollback.

Kavanagh said that won't fly at the Legislature because it amounts to a tax increase.

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