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PHOENIX -- Gov. Janet Napolitano is proposing a combination of long- and short-term borrowing, accounting maneuvers, diverting funds for highway construction and getting more money from those caught by the state's new enhanced photo radar system to finance a proposed $11.4 billion spending plan for the coming fiscal year.

The governor said the state budget has to grow because more people are asking for more services. She rejected the idea being pushed by some Republicans to cut spending -- or even to leave state spending at current levels. For example, her budget for the Arizona Health Care Cost Containment System, the state's Medicaid program, is expected to increase nearly 20 percent from what was set aside for this year, to more than $1.5 billion. And state aid to schools is up about $163 million, to more than $4.5 billion.

Her spending plan -- and particularly her methods of funding it -- faces potentially tough opposition in the Republican-controlled Legislature.

In fact, her budget is about $1 billion higher than one being proposed by the chairmen of the House and Senate Appropriations committees. That plan actually cuts expenditures by nearly $1.4 billion.

Napolitano acknowledged her plan is unbalanced: The amount of money she predicts the state will collect will be nearly $1.3 billion below what she identified as items that need to be funded. And that's even with her revenue projections being close to $700 million higher than the ones estimated by economists consulted by legislative staff.

But she makes that up through various budget maneuvers. On one side of the equation, $55 million in sales taxes that normally would be paid in July 2009 -- the first month of the following fiscal year -- would be moved into June. And on the other side, $297 million the state is supposed to pay to public schools in June 2009 would be held off a month, shifting the cost to the following budget year.

Longer term, Napolitano also plans to borrow $471 million for new school construction rather than paying cash, freeing up those dollars for other spending.

She also wants to use some gasoline taxes and vehicle registration fees now collected for highway construction and maintenance to instead fund the Highway Patrol. That gives her $53 million in tax dollars for other priorities.

But the governor said she does not believe that will make any real difference on financing Arizona's long-term transportation needs.

She also proposes to make up some of the other difference through increased revenue generation.

That includes tapping revenues from the new mobile and stationary photo radar sites Napolitano authorized the Department of Public Safety to set up last year to make roads safer. Napolitano figures the state could net $90 million a year.

And Napolitano thinks if Arizona spends more money advertising the Lottery it can convince people to buy more tickets, netting the state an extra $10 million a year.

She also proposes to take nearly $197 million from the state's "rainy day'' fund.

Even with all that, Napolitano's budget is balanced only if her projections of state tax collections are correct. The economists consulted by legislative staff figure Arizona will collect close to $9.3 billion this coming fiscal year in sales and income taxes.

Napolitano prefers the tax collection estimates prepared for her by a group of economists headed Dennis Hoffman, a professor at Arizona State University. These come up just short of $10 billion.

The governor said she does not believe it is fiscally risky to rely on the more optimistic forecast.

"Any revenue projection, by definition, is a projection,'' she said. "The question is have you chosen a reasonable one for which to budget.''

And the governor said if they prove wrong "you make mid-course corrections,'' which is what the state is having to do this budget year.

Her plan does have some savings. She predicts the state could cut its expenses by nearly $61 million a year by housing some convicted felons in county jails rather than state prisons.

But the governor said that savings is premised on counties accepting the payment the state is willing to give and not what they have been charging.

Napolitano actually puts her spending plan at $10.7 billion, a figure she called "basically a stay-even budget.'' But to get to that $10.7 billion figure, the governor essentially has taken certain expense items listed in the current $10.6 billion budget off the books for next year.

The biggest is that money for school construction, funds to be spent this year but not repaid until the future. "I would rather finance school construction and have cash for what goes on inside the schools than either stop construction or cut back on school spending,'' the governor said.

By contrast, the comparable budget proposed by the Appropriations chairmen is $9.7 billion. But that, too, is a bit understated: While it does not foresee borrowing for school construction, it does delay $300 million worth of payments for operating expenses for schools until the following budget year.

Napolitano also wants to remove the capital cost of some university projects from the budget -- many of which would normally be paid from operating funds -- and instead borrow nearly $1 billion. And she has structured the borrowing so the first payments would not be made until 2010.

The list includes more than $525 million in what the universities say is deferred maintenance and building renewal.