DALLAS - Arizona Senate Democrats have offered the sale and leaseback of the state's prison system as part of the solution to an anticipated $3 billion budget shortfall in fiscal 2010.

Legislators said securitization of future revenues of the state lottery or the prison sale-leaseback proposal would raise $500 million. The total program outlined at Tuesday's news conference would provide an additional $1.6 billion in revenue enhancement for use in the 2010 budget.

The Democrats' plan includes $1.4 billion from the federal stimulus package.

The option for the lottery or the prison sale is a one-time capital infusion, said Jeanette Tejeda de Gomez, communications director and policy adviser for the Senate Democratic Caucus.

"It's an option for either," she said.

On the same day that the Democrats outlined their budget-balancing proposals, Gov. Jan Brewer sent a memo to state agencies asking them to show how they would function in fiscal 2010 with cuts of 5% to 25% from their already-curtailed fiscal 2009 budgets.

Most agencies had their fiscal 2009 budgets cut by 10% in a budget bill signed by Brewer on Jan. 31. The cuts were made necessary by declining tax revenues that resulted in a $1.6 billion shortfall in the current fiscal year and $3 billion next year.

In Bewer's memo, budget director Eileen Klein asked the directors to provide realistic assessments of what the cuts would mean to their agencies' programs and services.

"As the governor has repeatedly stated publicly, everything is on the table," she said. "Unfortunately, permanent spending commitments based upon faulty or temporary revenues and a bleak economic outlook suggest more difficult times ahead for Arizona."

Senate Minority Leader Jorge Luis Garcia, D-Tucson, said the Democrats wanted to propose alternatives to additional cuts in state agency budgets. The party holds 12 seats in the 30-member Senate.

Garcia said the Democrats are willing to maintain the $580 million in cuts made in agency budgets that helped balance the $9.9 billion budget for fiscal 2009, but want the governor and Republican leaders to consider additional alternatives in fiscal 2010.

"We have heard from numerous constituents at the budget hearings we held around the state and from those who have come to the capitol by the thousands," Garcia said at the news conference. "The clear message is that they want to know other strategies aside from more draconian cuts and tax increases."

The Democratic plan would reinstitute a suspended statewide property tax to generate $247 million a year, eliminate corporate and individual income tax credits totaling $249.3 million, transfer $100 million from agency special-purpose funds, and delay $100 million in funding for higher education until fiscal 2011.

Garcia said Arizona has laid off 880 employees and furloughed almost 28,000 to balance the 2009 budget. Further cuts - such as those sought by Brewer - are not the best way to deal with the situation, he said.

"If we are to remain a state that wants businesses to come here and stay here, we must not decimate our state," he said. "What business is going to want to relocate to a state with an education system that is funded next to last in the 50 states?"

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