DALLAS - Just days after the Arizona Legislature bridged a $1.6 billion shortfall, the state Supreme Court punched a new $30 million hole in the budget, overturning the state's decision to levy budget-balancing payments from local governments.

In its ruling Tuesday, the court said that the state's requirement of "contributions" from local governments to balance the budget was unconstitutional because it violates laws for how state revenue can be appropriated. The suit challenging the payments was filed by the League of Arizona Cities and Towns.

"The league's position is that a portion of the general appropriations bill for fiscal year 2009 is invalid under the Arizona Constitution because it imposes a new tax, fee, or assessment not approved by two-thirds vote in both houses of the Arizona Legislature," the league said in explaining the suit to its members. "The league also challenged that a 'contribution' by local governments does not belong in an appropriations bill."

Arizona's new Republican governor, Jan Brewer, cited the ruling as an example of the failed policies of her predecessor, Democrat Janet Napolitano.

The ruling "appears to be the latest example of unsound and improper budget management decisions that have contributed significantly to state budget impacts being felt throughout Arizona," Brewer said. "Contrary to the previous administration's legal argument against the cities and towns, I believe the court's decision is correct. I will continue to work closely with the legislative leadership to review its options regarding this revenue in accordance with the court's decision."

Republican legislative leaders, who had worked with Napolitano to come up with the funding measure, said they would likely find extra funds from the budget-balancing measure passed Saturday. House Majority Leader John McComish, R-Phoenix, said the Legislature padded the cuts by $90 million in the adjusted budget.

Brewer signed legislation Saturday that balances the current budget through spending cuts. Previously secretary of state, she was sworn in last month to replace Napolitano, who left office to join President Obama's administration as head of Homeland Security. The former governor had struggled with falling revenues in her last months in office.

Since assuming office, Brewer has sharply criticized Napolitano's efforts to balance the budget, saying they were based on "the false hope of increasing state revenues."

"More shockingly, new discretionary spending was approved without realistic funding and the state's rainy-day fund was drained," Brewer said. "This insatiable appetite for spending has left us with enormous challenges and few options."

In a three-day special session that concluded Saturday, lawmakers made deep cuts in funding for public schools and higher education, despite pleas from Democrats that education be spared.

Funding to school districts and charter schools saw cuts of $130 million, including a $21 million cut of annual funding for computers and other equipment and a $98 million reduction accomplished by not overriding a constitutional spending limit for districts.

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