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University construction projects in jeopardy

Although Arizona’s university system got approval to use state Lottery money to pay for $1 billion in construction projects, shovels have yet to hit the dirt and uncertainty about the state budget has caused many delays.

That means students and faculty may have to endure worn-out facilities, while the universities can’t expand certain programs or keep up with enrollment growth for a while.

“Everything is on hold,” said Joel Valdez, senior vice president for business affairs at the University of Arizona in Tucson.

The same is true for Northern Arizona University in Flagstaff, while Tempe’s Arizona State University has only a small number of ”critical-need” projects under way,

The Lottery-funded construction program, billed as a way to jump-start the economy, was signed into law about a year ago. The program includes classroom renovations and a new construction school at ASU, and an expansion of the UA medical school in Phoenix.

The program is intended to generate several thousand jobs and has the backing of business and political leaders.

But the program has run into challenges. Tension first surfaced last fall when a state legislative committee refused to review $167 million in construction projects, a required first step, citing concerns about spending large amounts when the economy was crashing.

Some legislators wanted to preserve Lottery funds in case the state needed to shore up budget deficits.

While the committee later approved the projects, the state budget crisis caused university officials to hold off issuing bonds to cover construction costs.

The officials are waiting until the 2009-10 budget is finalized because a pair of bills in the state Legislature could impact their spending authority and the amount of Lottery funds available.

A Senate bill would eliminate the program, except for about $167 million in already-approved projects. A House bill would continue to use increased amounts of Lottery funds to help the state’s budget deficit.

Passage of the House bill would affect how much universities get because they are last in line to receive Lottery funds, behind state services such as parks and transportation.

Lottery funds are due to start flowing to the universities in fiscal 2010.

“Next year is going to be a tough one to predict,” said Karen Emery, deputy director of the Arizona Lottery.

She said last year’s Lottery sales totaled $473 million, and Lottery officials expect to finish the year about 2 to 21/2 percent ahead of last year.

An ASU projection shows the university system was anticipating $10.8 million in Lottery money for fiscal 2010, increasing to $33 million the following year. To fund the projects, the universities would issue bonds and cover 20 percent of debt service through university revenues. The state would pay the other 80 percent.

Members of the Arizona Board of Regents, which oversee the universities, remain hopeful.

“But we’re also realistic,” said Ernest Calderon, incoming regents president. ”We understand there are significant budget challenges … We’re keeping (construction projects) on the back burner with the hope there will be some sort of breakthrough that will allow us to move ahead.”

A handful of projects that aren’t part of the program are under way. They include two residence halls at UA and a $120 million complex for honors students at ASU.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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