Arizona Gov. Janet Napolitano is considering a special session of the Legislature to close a $1.2 billion budget gap, just six months after lawmakers combined spending cuts and other measures to cover a $2 billion shortfall.

Napolitano and legislative leaders must decide whether the shortfall requires a special session before the opening of the regular session in January. The $1.2 billion deficit is for the remainder of fiscal 2009, which ends June 31. It follows a $2 billion gap in the $10 billion general fund budget that was bridged through cuts, use of state reserves, and other adjustments.

The economic downturn has hit Arizona hard, particularly the housing slump, and declining retail sales have led to store closings. Napolitano said that revenue from sales and corporate taxes have failed to meet projections.

The Democratic governor has not outlined any specific spending cuts. This week, she will meet again with legislative leaders, including newly named Senate President Bob Burns, a Republican fiscal conservative who replaces Tim Bee as of January. Burns was chairman of the Senate Appropriations Committee. Napolitano and legislative leaders are meeting again this week.

The minority House Democrats chose Rep. David Lujan of Phoenix over the current leader, Rep. Phil Lopes of Tucson. The party caucuses’ election of the new leaders followed election results last week that saw Republicans withstand Democratic efforts to pick up more seats in the Legislature.

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