PHOENIX (AP) - Top Republican legislative leaders asked Democratic Gov. Janet Napolitano to propose a plan to tackle the state's projected budget shortfall, and she responded by saying she's willing to work with them.

Senate President Tim Bee, R-Tucson, and House Speaker Jim Weiers, R-Phoenix, said the smaller-than-expected surplus left June 30 at the end of the last state fiscal year ``represents a true shortfall in this year's budget and may foretell a much bigger problem in the year to come.''

The legislative budget staff on July 31 reported that tax collections on the 2006-07 fiscal year were nearly $226 million below expectations. Lawmakers had planned to spend that money during the fiscal year that began July 1, so the shortfall potentially puts the current budget in the red.

Factors cited by the budget staff for the slower than anticipated growth in revenue in the last fiscal year included a slower national economy and a decline in construction.

``Now is the time to act,'' the Republican legislative leaders said in an Aug. 17 letter obtained Wednesday by The Associated Press. ``We are early enough in the state's fiscal year that sound fiscal management by agency directors will enable us to address the shortfall without using the Rainy Day Fund, increasing debt or reverting to tricks and gimmicks.''

Bee and Weiers said the legislative budget staff is preparing a list of potential solutions but noted that state agencies have ``have great flexibility'' to manage lump-sum funding provided in the current budget.

``It is our hope that your office has begun to work with the agency heads on prioritizing spending to meet our actual revenues,'' they wrote.

Napolitano spokeswoman Jeanine L'Ecuyer said Napolitano planned to write back to the leaders ``to assure them that they can be confident that state agencies are engaged in this issue.''

The governor's budget staff has already been asked ``to prepare possible solutions'' and Napolitano will suggest that her aides meet with their legislative counterparts to compare notes, L'Ecuyer said.

Once that happens, the governor and the legislative leaders should meet, L'Ecuyer said.

In the meantime, Napolitano is urging lawmakers to ``proceed with temperance and caution'' since so much of the budget to education and voter-mandated spending, L'Ecuyer said.

Napolitano top budget adviser's said July 31 that the situation would be monitored and that Napolitano could propose a midyear fix as part of her January budget proposal to the Legislature.

The state has enjoyed relative prosperity for most of Napolitano's 4 1/2 years in office but she and lawmakers had to confront a major budget shortfall when she took office in January 2003.

Budget-balancing tactics used during that period included sweeping money from special-purpose funds and delaying school projects. A federal bailout also helped bridge the gap between revenue and spending.

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Arizona Legislature: http://www.azleg.state.az.us