DALLAS - The Democratic minority in the Arizona House has proposed a budget-balancing solution for fiscal 2010 that includes $2.4 billion in federal stimulus funds and a $233 million tax on electricity generated with fossil fuels.

The House Democrats' plan, outlined at a news conference on Monday, joins preliminary budget proposals from Democrats in the Senate and separate versions put forth by the Republican leadership in both chambers.

The plan would generate $500 million in additional revenue through increases in the income tax for top earners and the suspension of tax cuts.

The additional revenue would come in part from a 10% increase in the state income tax rate, to 5.04% from 4.5%, for individuals making more than $150,000 a year and married couples making more than $300,000. The income tax rate was reduced in 2006.

The budget plan would also restore a suspended state property tax to generate $250 million, and eliminate tax credits for film production and for donations to private schools to produce a total of $117 million a year.

The proposal from Senate Democrats calls for $500 million in long-term borrowing by securitizing the state lottery or through a lease-buyback plan for state prisons, but those are not part of the plan developed by the House Democrats. The House plan would cut state agency budgets by 2%, while the Senate plan maintains the current level of funding.

The fiscal 2010 budget plan proposed by Senate Republicans would reduce agency spending by $842 million, or 8.3%, from 2009 appropriations. The House GOP plan would cut $739 million, or 7.3%, from agency budgets.

Gov. Jan Brewer, a Republican, has suggested raising $1 billion a year for three to four years with a temporary, voter-approved one-cent increase in the sales tax to 6.6%.

The Democrats control 24 of the 60 House seats, and 12 of the 30 seats in the Senate.

House Minority Leader David Lujan, D-Phoenix, said the budget proposal protects funding for public and higher education, and reduces taxes for most residents.

"Our plan offers common-sense, practical, and smart solutions that will get our state's economy back on track, put people back to work, and prepare kids for college and the work force," Lujan said at Monday's news conference.

House Republicans said the Democrats' plan does not balance the budget because it assumes a revenue shortfall of $2.4 billion in fiscal 2010, while the actual figure may be closer to $3.4 billion when the latest revenue projections are released this week.

House Majority Leader John McComish, R-Phoenix, said the $1 billion in additional taxes in the Democrats' proposal would harm the state.

"We need to fix our economy, not further harm it by creating more of a tax burden for families and businesses," he said.

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