So far, lawmakers and the Governor's Office have avoided conjuring the greatest fear of local governments - changing the formula that determines who gets what from the collective pot of money they all share.

If anyone doubts the state's troubled economy is clobbering Arizona's cities and towns, they only have to look in the newspaper. "Phoenix details plan for drastic cutbacks;" "Cities, towns resort to layoffs;" "Falling revenues affect city of Prescott operations."

While other contributors to state revenues have dropped off severely of late, the Arizona Lottery has been a growing source of tens of millions of dollars per year since its inception in 1980. The lottery funds a variety of voter-approved state programs in areas such as education, health and transportation and has contributed $2.3 billion in all to its beneficiaries.

The Arizona Supreme Court announced on Dec. 2 it will not hear a lawsuit filed by local governments that sought to challenge legislation affecting land development and public benefits for immigrants. The petition for special action filed with the court on Nov. 23 by the League of Arizona Cities and Towns charged that the provisions in question were unconstitutionally included in a state budget bill.

Before Gov. Jan Brewer and legislative leadership can settle their most recent legal dispute with the League of Arizona Cities and Towns, the sides may have to agree on exactly what they're fighting about.

A recent vote by the League of Arizona Cities and Towns to sue the Legislature in an attempt to undo provisions passed in the most recent special session could have broader effects on the lobbying group for local governments.

Municipalities are gearing up for a lawsuit challenging restrictions lawmakers put on cities and towns when they approved the fiscal 2010 spending plan.

The Arizona Supreme Court on Oct. 29 unanimously agreed that Arizona public records request statutes apply to electronic data-entry records and are not limited to government documents subject to copy and inspection under state law.

Arizona ranks ninth nationally in its reliance on sales taxes to fund its state and local governments, according to a report by a nonpartisan tax research organization. The Washington, D.C.-based Tax Foundation found that 48.4 percent of Arizona's tax base came from general sales taxes and from selective sales taxes on motor fuel, tobacco, insurance premiums, public utilities, amusements and alcoholic beverages.

Lawmakers and the governor said legislation passed earlier this year that limits development-impact fees is legal, despite threats of a lawsuit from municipalities. A spokesman for Brewer said she wasn't concerned about a lawsuit. "I think the governor's comfortable with the legality of what she's signed," Paul Senseman said.