PHOENIX (AP)- Gov. Janet Napolitano proposed new borrowing to pay for big building plans for state universities Friday in a proposed budget that uses a variety of fixes to fill a huge budget shortfall without raising taxes or dramatically cutting spending.

To avoid a deficit, the Democratic governor’s budget proposal uses new borrowing to build schools, shifts some prison costs to counties and boosts revenue by putting speed enforcement cameras on highways statewide.

The 2008-2009 budget’s spending goes up to $10.7 billion from the previous year’s $10.6 billion. There is even more spending “off budget” that Napolitano pays for with money from sources other than the general fund.

With hundreds of millions of dollars of rising costs for schools, universities, prisons and health care, Napolitano said she had to be creative to avoid damaging cuts.

“We have done that all in the context of staying balanced and not raising taxes,” Napolitano said. “This is a very lean budget all things considered, especially given a state of population growth.”

A key Republican leader said Napolitano’s budget appeared to be based on an overly optimistic revenue forecast and to avoid necessary but hard decisions needed to keep the state in the black while not piling debt on future generations.

“This budget gives me a lot of concern,” said Senate Majority Leader Thayer Verschoor, R-Gilbert. “It looks like the Legislature is going to have the heaviest burden in dealing with this.”

Also late Friday, Republican chairman of the House and Senate Appropriations committees released their own recommendations for the next fiscal year, urging fellow lawmakers to hold the line on spending.

Sen. Bob Burns of Peoria and Russell Pearce of Mesa called for nearly $1.4 billion of spending cuts, $230.8 million in transfers from special funds and nearly $122 million of cuts in revenue-sharing to local governments.

“It is important that we take significant permanent steps now or this budget crisis will continue,” they wrote in a memo to committee members.

The University expansion projects backed by Napolitano, totaling $1.4 billion, would complete the new Arizona Biomedical Campus in Phoenix and construct at least four new buildings on other campuses, plus renovations and deferred maintenance. The money would be borrowed, with the equivalent of mortgage payments starting two years from now.

“This plan allows us to catch up and then get ahead of ... enrollment growth at the universities,” Napolitano said.

In the largest of five steps to erase a shortfall she pegs at $1.2 billion, Napolitano also wants the state to borrow $471 million for the annual expense of building new K-12 schools. Legislators leery of the state taking on more debt have yet to bite on her proposal for similar borrowing to erase the current fiscal year’s shortfall.

“We either don’t build schools or we have to finance schools,” Napolitano said. “Debt is a function of good fiscal management.”

Her answers to the shortfall - largely a product of slumping revenue because of the economic downturn - also include $139.6 million in various economy moves for state agencies, $186 million in steps to produce new revenue, postponing a $297 million monthly school payment by two weeks into the next fiscal year and withdrawing $196.6 million from the state’s rainy day reserve. That fund would still have $225 million untouched.

The budget shifts some costs to counties by requiring county jails to house thousands of prisoners who now spend less than a year in state prisons for nonviolent crimes. That will save the state a projected $60.8 million but cost the counties less than that.

“We’d love to do everything to help the state budget, but it would be putting (a burden) on the back of the taxpayers in Santa Cruz County,” Santa Cruz County Sheriff Tony Estrada said from Nogales.

Napolitano said that shift makes sense for the state both from policy and fiscal points of view and that her budget protected local governments in other areas.

“Counties won’t be happy but this, to me, is a reasonable judgment to make,” she said.

Another economy move: taking $53 million from the state’s share of fuel tax revenues to pay for Highway Patrol operations. The one-year shift won’t put a brake on highway projects already planned, Napolitano said.

The budget counts on $90 million in new state revenue expected from the deployment of speed cameras on highways statewide. Napolitano said she made that 2007 decision for public safety. “Now we take advantage of it,” she said.

An additional $55 million of new revenue would come from making an additional 2,700 Arizona businesses pay a half-month of sales tax collections early so that the state gets the money before the fiscal year ends June 30. Some businesses already do that.

Also, she projects $31 million in additional tax collection through stepped-up collection efforts that include hiring more auditors.