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Projected Deficit in Arizona Spurs School-Funding Plan

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To offset a looming budget deficit, Arizona needs to reorder parts of its education-finance system, according to a report released last week by a state task force.

The report, which examines the state's overall fiscal health into the next decade, projects an annual budget shortfall of nearly $1 billion by 2000 if current revenue and spending trends continue.

Nicknamed "Fiscal 2000," the group that wrote the report included six legislators, the state school chief, and eight members of the business community. Gov. Rose Mofford and both houses of the legislature each appointed five members to the group, officially known as the Joint Select Committee on State Revenues and Expenditures.

Dana Naimark, project manager for Fiscal 2000, explained that the report includes three different tax-increase packages for the Governor's and legislature's consideration.

In addition, she said, the report also recommends several changes in the way the state funds education. It calls on lawmakers to:

Eliminate the homeowners' rebate.

Under current law, the rebate reduces property taxes an average of 56 percent. The state then pays the difference directly to school districts, at a cost of about $150 million a year.

The report proposes that some of the resultant savings be put into the state education fund, which provides money to districts according to an equalization formula.

Evaluate the state's equalization formula on a regular basis.

"Most of the factors [used in allocating state money to districts] have been in there since 1980 and haven't changed," said Ms. Naimark. The report suggests no new factors to consider, she noted, only that they be "looked over on a periodic basis."

Institute a minimum school-tax rate applicable to all private property.

The study also proposes revamping the state's "override spending" law, which requires districts to get voter approval to spend more than the prescribed amount for certain budget items.--mn

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