DALLAS — The $8.66 billion budget proposed by Arizona’s Republican legislative leaders represents $106 million less in spending than in the current outlays.

The proposed budget for fiscal 2013 that begins July 1 is also about $200 million lower than the one submitted by Republican Gov. Jan Brewer. Brewer’s proposed budget would mean an 8% increase over the current $8.3 billion spending plan that ends June 30.

While the legislative proposal would reduce debt, it includes no money for Brewer’s proposal to buy back the state capitol complex that was mortgaged in 2010 through certificates of participation. Brewer had sought $106 million to eliminate the debt and restore state ownership of the capitol in Arizona’s centennial year.

House Democrats called Brewer’s capitol buy-back plan a “public relations gimmick” that would deprive other state programs of badly needed funds.

“The only real 'benefit’ to the governor’s proposal is that a symbolic piece of paper — the title to the capitol — comes back to the state,” said House Minority Leader Chad Campbell. “But that money could be used today to create jobs will be tied up in an escrow account benefiting no one.”

The legislative budget denies Brewer’s request for $100 million for school construction and $50 million for new maximum-security prison beds.

Also sidelined were Brewer’s proposed 5% pay raise for state employees and $50 million for reading remediation for school children.

With the slow but steady recovery of Arizona’s economy, lawmakers are enjoying an anticipated surplus of revenue after three years of severe spending cuts. But the state will lose one source of revenue in 2013 when a temporary one-cent sales tax increase expires. The three-year tax increase was approved by voters in 2010 to avoid even deeper cuts in education and health programs. After a prolonged battle with Republican legislative leaders, Brewer prevailed in legislation calling for the tax increase.

Earlier this month, Moody’s Investors Service raised its outlook on the state’s Aa3 issuer credit rating to stable from negative. Standard & Poor’s revised its outlook on the state’s AA-minus issuer rating to stable from negative on Dec. 21. Fitch Ratings does not rate the state. The COPs used to lease the capitol are rated A-plus by Standard & Poor’s and A1 by Moody’s.

As lawmakers consider the big picture on the budget, a bill designed to provide relief to local governments is also advancing.

The Senate last week passed SB 1288, a bill that would eliminate city water fees and publicly fund the Arizona Department of Water Resources. The department has had its budget cut for the past several years, with offsetting water fees imposed on cities and towns.

“Due to 27% of the state’s population residing outside of a city or town, and many municipalities utilizing a private water resource, the fee has been unfairly distributed,” Bullhead City Mayor Jack Hakim said in a statement on the bill.

SB 1288 would appropriate $6.3 million from the general fund and repeal ADWR’s ability to collect a municipality fee.

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