DALLAS — Arizona lawmakers are nearing resolution on a state budget that closes a $3 billion revenue gap through massive cuts in spending.

The spending measures are included in 10 bills that control appropriations in fiscal 2010, which begins July 1. The cuts come after roughly $2 billion was cut from the current budget, including $650 million in reduced spending approved this month.

The Legislature’s 2010 budget, backed by Republican House and Senate leaders, does not include a tax increase sought by Republican Gov. Jan Brewer.

Over Democratic opposition, the GOP leaders approved the permanent repeal of a property tax that would have raised $250 million. The tax was scheduled to resume next year after a period of suspension.

Local governments would also be hard hit by the state’s reclaiming $200 million of vehicle registration fees that had gone to cities and counties.  Phoenix estimates the loss of revenue could cost its general fund $27 million, and Maricopa County, which includes Phoenix, estimates its loss at $100 million.

While the Senate version of the budget calls for turning over three state prisons to private operators, the House version does not include that provision.

Among the deepest cuts in the Republican budget is $661 million taken from state agencies, including a $220 million reduction for the Arizona Department of Education. Health care outlays would be reduced by about $153 million.

The state would rely on $1 billion in federal stimulus funds to cover some of the spending gap.

Earlier this month, lawmakers agreed to use $250 million of federal stimulus funds and push $100 million in payments to state universities into the next fiscal year to partially cover a $650 million spending gap under the current fiscal 2009 budget.

The emergency budget measure pushed $300 million of payments to K-12 schools into the next fiscal year while also requiring schools to tap their own excess balances.

The governor has proposed a five-point plan for the coming fiscal year that includes a temporary tax increase of at least $1 billion per year. 

“My budget plan includes a temporary tax increase of at least $1 billion per year to avoid devastating our education, public safety and vital public health budgets,” Brewer said in her proposal. “Our state budget revenues have declined, not improved, since the presentation of my plan in March.”

Arizona Treasurer Dean Martin warned last month that the government was still $239 million in the red after income tax payments were due and that the state would have to borrow money through warrant notes to make ends meet. The state has already relied on warrants to cover cash flows for fiscal 2009, the first time it has had to do so since the Great Depression.

“It is disheartening that I have had to take these extraordinary measures just to keep the lights on, to make sure tax-refund checks clear, for teachers to be paid, and for the state to be able to cover its daily expenses,” Martin said.

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