Gov. Janet Napolitano, a Demo-crat, delivers her State of the State speech to the Legislature.

the associated press

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MYSTERY SHOPPERS

PHOENIX — Arizona Gov. Janet Napolitano called Monday for legislative leaders to not lose sight of areas such as education and transportation in the face of a nearly $1 billion budget shortfall.

In what was her sixth State of the State address, Napolitano rolled out policy initiatives reflecting the state's slim resources.

"We must remember that Arizonans years from now won't ask how we balanced the budget," she said. "Instead, they'll ask how we improved education, ensured their safety, built a prosperous economy and planned for explosive growth."

Education

• Create a "Centennial Scholars" program that would give high school graduates with a B average a free ride through a community college or state university, provided they "stay out of trouble" and complete community service.

• Raise the dropout age from 16 to 18, requiring those students to stay in school. Napolitano said it's "time to end the fiction that a high school diploma is the final goal of education or that a student should be allowed to drop out at the age of 16."

• The governor's education agenda would also guarantee a set four-year tuition rate for next year's freshman class, something Northern Arizona University is already doing and Arizona State University is considering.

— Reaction: House Speaker Jim Weiers, a Republican, said Napolitano's plan to provide free college access to students with B averages needs to be explored for costs.

He was also critical of raising the dropout age, saying it amounts to "forcing kids to stay in school."

Senate President Tim Bee, a Republican, suggested looking at why students are dropping out. "There would be the core answer," he said.

Transportation:

• Napolitano requested lawmakers put a measure on the 2008 or 2009 ballot that would allocate funding for freeways and a Tucson-to-Phoenix rail line. Such a proposal would likely rely on a gasoline or sales tax hike or bonding, something lawmakers on both sides said they are open to exploring.

•The governor advocated for a "3-in-1" drivers license that would serve its normal purpose and also be used as proof of citizenship to get across the border and proof of the legal right to work in the U.S. Some lawmakers have been critical partly because it would give the federal government say over state licenses.

— Reaction: A year ago, Napolitano touted plans for a commuter rail, much to the delight of Tucson Mayor Bob Walkup.

This year Walkup says the plan will still happen, but it may be 15 years away.

"It's taken decades where we're even at the point where we're willing to talk about light rail as a possibility," he said.

Economy:

• To address what Napolitano referred to as the "subprime-lending debacle," she called on legislators to pass the Arizona Home Equity Theft Protection Act, which would license "equity purchasers." She also wants the state to license loan officers.

• She again called on legislative leaders to make changes to the state's employer-sanctions law, with more funds to investigate and clarifications of what constitutes a complaint against an employer.

Energy and environment:

• Napolitano said that by 2025, all electric utilities should provide 15 percent of their electricity from renewable sources. On energy, she also called for new statewide minimum standards for new construction.

Health care:

• Allow parents who do not have coverage for their children to buy it at their own expense through KidsCare, with no subsidy from the state.

• Mandate all insurers continue their coverage for a family's unmarried children until they turn 25.