Gov. to release proposal for new Arizona budget

PHOENIX (AP) -- Arizona Gov. Jan Brewer was scheduled on Friday to release her new budget proposal, one that was expected to largely hold the line on most state spending after several years of cuts.

Though the state's economy and revenue outlook are improving, a temporary sales tax increase is set to expire in 2013. Higher Medicaid costs from the federal health care overhaul are also expected by next year.

Brewer has signaled that she'll propose spending to replace a decrepit state computer system and for tourism promotion. She has already proposed that the state spend $106 million to buy back three Capitol Complex buildings sold two years ago to raise cash to close past budget shortfalls.

The governor has said the state should scrap a plan to shift thousands of prisoners to county jails and not repeat a separate raid on some counties' treasuries.

Brewer's release of her budget proposal for the 2012-2013 fiscal year that starts July 1 is significant because it represents the public start of the Legislature's work on a new state budget, which determines what services Arizonans will get for things ranging from schools to highway rest areas. If last year's result is a guide, Brewer's proposal could form the basis for what is eventually approved by the Republican-led Legislature

Meanwhile, education advocates and others are calling for restoration of spending that was slashed to balance recent budgets.

The current fiscal's budget has $8.3 billion of spending, down from a high of over $10.2 billion in the 2006-2007 fiscal year, before the Great Recession.

In recent years, Brewer and GOP lawmakers have used painful spending cuts, embarrassing borrowing, legally questionable raids on special-purpose funds and outright budget gimmickry to close shortfalls that at one point represented roughly a third of state spending.

State services and programs were cut by $1 billion to balance the current budget alone, roughly half of it through eligibility cutbacks and other reductions to the state's Medicaid program, which provides health care for low-income people.

The one-cent sales tax championed by Brewer and approved by voters in May 2010 also played a significant role by providing $1 billion annually for three years.

Education advocates have said they plan to launch an initiative campaign for a November ballot to extend the penny increase, but Brewer has said the only new revenue she's looking for is what will come from adding jobs.

"This tax will end on my watch," she said Monday during her State of the State address.

Brewer's office says repurchasing the Executive Tower and the House and Senate buildings would save the state an estimated $47.5 million in interest costs, but the move is still largely symbolic because the repurchase involves only a small fraction of the 22 properties sold through lease-purchase deals.