DALLAS - Arizona lawmakers struggling to close a $1.9 billion budget gap just days before the end of the fiscal year have approved up to $750 million of tax-exempt revenue bonds for a rock-and-roll theme park.

The measure authorizing the funding, SB 1450, is awaiting Gov. Janet Napolitano's signature after winning passage in the Senate Wednesday by two votes. The House passed the bill 39 to 17 in April.

Opponents said they fear that defaulting on the project bonds would result in state liability in the future. Sen. Ken Cheuvront, D-Phoenix, said he sees a risk of lawsuits from lenders if the park fails. But supporters argued safeguards in the bill would protect the state.

A staff attorney for the Legislative Council that serves the Legislature wrote in a memo that the bill's wording "makes it very clear" that the state would not be liable for repayment of special district revenue bonds. The memo cited Arizona court rulings that found no state liability for revenue bonds not linked to the state's general treasury.

Senate Majority Leader Thayer Verschoor, R-Gilbert, said that if the theme park succeeds, it will create thousands of jobs and generate sales taxes for the state government.

Promoters say the park, called Decades, would employ up to 5,000 in the town of Eloy in Pinal County, halfway between Tucson and Phoenix.

In an op-ed piece in suburban Phoenix's East Valley Tribune, Byron Schlomach, director of the Goldwater Institute Center for Economic Prosperity, a conservative think tank, accused lawmakers of "taking the state for a ride."

"Even if there's no lawsuit, Arizona's bond ratings will suffer if the park goes belly-up," Schlomach wrote. "Future bond buyers, with no idea if they're really buying speculative corporate bonds or genuine government bonds, might avoid buying Arizona bonds all together."

The bill would create a special theme-park district to govern the park, issue bonds, and impose a maximum 10% sales tax within the park.

Developers, whose names have not been disclosed, would be allowed to develop a 950-acre "special attraction district" and issue up to $750 million in revenue bonds if they were able to raise $100 million in private investment.

With a 2000 census population of 10,375, Eloy's median household income was $26,518 and the per capita income was $9,194. The largest employer is Corrections Corp. of America, whose inmates are included in the census. Eloy is also the world's largest skydiving drop zone.

Theme parks can be financially risky. One called Wild West World near Wichita, Kan., is in bankruptcy and in need of a buyer.

Six Flags parks, which have struggled in recent years, saw in-park spending rise 13% in the first quarter of 2008. Ohio-based amusement park operator Cedar Fair said attendance through May has been flat, while hotel bookings have been down.

Debate over the theme park took place as Senate leaders announced a plan to close a nearly $2 billion shortfall in the budget scheduled to take effect Tuesday. The Senate plan came one day after a House proposal. Napolitano has not said which, if either, proposal she favors.

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