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Ongoing budget talks stuck on university bonding plan

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Gov. Doug Ducey’s $1 billion university bonding proposal remains a major stumbling block to reaching a budget deal as lawmakers reached the key 100-day mark in this year’s session.

House Speaker J.D. Mesnard and Senate President Steve Yarbrough said today there is no solution in sight.

The money is being sought to build new facilities and deal with a backlog of maintenance at the three state universities.

Talks in the Legislature are likely to focus on a new way to create a $30 million a year funding stream needed to finance the bond issue.

The governor has proposed allowing the universities to keep sales taxes they generate to help back the bonds, but that has prompted strong and nearly united opposition among Republicans who control the Legislature.

“The (sales tax) aspect of it is challenging by itself, and bonding also as an issue has always been challenging over the years,” Mesnard said, saying lawmakers will have to work through the problem.

On another issue, GOP lawmakers appear settled on bigger teacher raises than Ducey proposed. He wanted two percent over five years as part of an ambitious $114 million proposal that included $10 million for schools in very low-income areas to implement or expand full-day kindergarten or other literacy programs; $6.4 million to give $1,000 signing bonuses to teachers hired at low-income schools; and $38 million in extra funding for high-performing schools.

The teacher pay proposal was widely panned because it provided a raise of only about $1 a day next year, or about $180.

House and Senate leaders appear to have settled on a two-year phase-in of the raises rather than a five-year period. That would give the average teacher who earns about $45,500 about $450 more in each year.

Other components of the governor’s education proposal remain in flux.

Another key issue is road funding for counties and cities that wasn’t included in Ducey’s January budget proposal but a major issue for rural lawmakers.

Much of the $9.8 billion spending plan is settled, according to Sen. Debbie Lesko, the Republican who chairs her chamber’s appropriation committee and is involved in the negotiations.

The budget is split between five major categories – K-12 schools, Medicaid, state prisons, universities and social services.

“I think we’re close with the exception of the huge, gaping disagreement, which is on the university bonding proposal,” she said.

Lesko said Republican members remain split between those who oppose using sales taxes and those opposed to any new university funding.

“I don’t think it’s a good idea,” Republican Sen. Judy Burges of Sun City West said of the bonding plan. “It just presents a problem for our future legislators” by committing ongoing revenues that might be needed elsewhere.

The Legislature hit its 100th day of the session on Tuesday. It traditionally aims to adjourn by that day, but it can’t do that until a budget for the fiscal year that begins July 1 is passed and signed by Ducey.

“I am still hoping for the end of this month, but obviously with every day that passes it becomes more of a challenge,” Mesnard said.

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