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2:26 AM Wed, Sept. 19th

Arizona Senate approves budget-balancing plan

PHOENIX - The Arizona Senate approved a budget-balancing plan Wednesday that includes the repeal of a state property tax, but rejected a sales tax hike proposed by Gov. Jan Brewer and $400 million in income tax cuts sought by Republican leaders.

It wasn't known whether the rejection of the sales tax hike would prompt a veto from Brewer. The governor vetoed an earlier budget because it didn't send the tax increase to the ballot for voters to decide.

Senate President Bob Burns says Republican leaders worked hard to win approval for the sales tax measure and he doesn't know what else he could have done to get it passed.

"I don't know how you manufacture the voters. They are either here or they are not," said Burns, a Republican from Peoria.

The plan was approved by the House on July 31 and stalled once it showed up in the Senate, where GOP leaders struggled to garner enough support for Brewer's sales tax hike.

The package, similar to a budget plan approved by the Legislature earlier this summer, moves to the House, where lawmakers will be asked to sign off on tweaks that were made by the Senate. The House will reconvene at 1 p.m. Thursday.

Democratic Sen. Rebecca Rios of Apache Junction, who voted against the sales tax hike, said money generated from the sales tax increase would be used to pay for the separate measure that would have cut individual and corporate income taxes. "This is disingenuous," Rios said of the sales tax measure.

Republican Rep. Sylvia Allen of Snowflake, who voted to put the sales tax hike measure on the ballot, took exception.

"To say that these tax cuts for businesses are put on the backs of citizens in Arizona is a downright unbelievable comment to me," Allen said. "We have got to do things to get our economy functioning and running."

The sales tax would have increased by a penny on Jan. 1 and, after two years, would drop by a half-cent for an additional year. It was intended to fund K-12 education, health and human services and public safety.

An effort to resurrect the proposed sales tax failed on a 15-10 vote.

Brewer's office declined a request for comment on the Senate vote but promised to release a written statement Wednesday evening.

The property tax has been suspended for three years but is set to restart. State Treasurer Dean Martin said counties will be required to levy the tax if lawmakers don't repeal it by the end of the week.

Allowing the property tax to return would net the state approximately $250 million a year in additional revenue. The owner of a $200,000 home would pay an additional $70 in taxes.

The proposed tax cuts that were rejected totaled $200 million for individuals and $200 million for corporations and were intended to make Brewer's sales tax hike palatable to Republicans.

The overall budget package didn't garner votes from Democrats, who complained their priorities were disregarded by Republican leaders who shut them out of negotiations of the plan that cleared the Senate on Wednesday.

"They don't want to negotiate with us. They want us for free," said Senate Minority Leader Jorge Garcia, a Democrat from Tucson.