COLUMBUS — Ohio lawmakers are supposed to find a way to fix school funding first and worry about the effects on state finances later.

        But as Gov. Bob Taft and legislative leaders cope with another budget shortfall caused by the state's slowing economy, they admit it's getting tougher to find a way to satisfy an Ohio Supreme Court order to narrow the gap between rich and poor schools.

        “Any time you have to make cuts and we're spending more on schools, it's going to be an interesting and difficult process,” Senate President Richard Finan, R-Evendale, said Tuesday.

        A team of negotiators from the House, the Senate and the governor's office reportedly are near agreement on a compromise school funding plan. News that state tax revenues will drop $562 million below original estimates could throw another obstacle between lawmakers and a consensus.

        “The (school funding) numbers are going to be out on the table very shortly,” Mr. Finan said. “We're going to have to look at everything to get to where we want to be on school funding.”

        That likely means state agencies will suffer budget cuts over the next two years. Mr. Taft's $44.8 billion, two-year budget proposal called for an average 1 percent increase for most state agencies, excluding the Department of Education.

        Though Mr. Taft, Mr. Finan and House Speaker Larry Householder, R-Glenford, are sticking to a pledge not to raise taxes to fund schools, some tax cuts could be delayed or eliminated.

        Mr. Taft said Tuesday he would not rule out eliminating or delaying “recently enacted tax exemptions.” He would not offer any more details than that.

        Exemptions that take effect next fiscal year include a corporate franchise tax break for business research and development efforts and a sales tax exemption on prescription drugs doctors offer as samples. Delaying both could produce $69 million for schools over the next two years.

        The governor also has hinted the state's $1 billion “rainy day” fund could be tapped to provide first-year funding for a new education reform plan. Mr. Finan criticized the idea.

        “What good does it do to take one-time money and plow it into a formula,” he asked. “I have great concerns about going into the rainy day fund at this time.”

        Mr. Householder may be willing to phase in funding increases for such things as special education over the next few years instead of providing all the money right away, said spokeswoman Jennifer Detwiler.

        “That's something we'll maybe take a look at,” Ms. Detwiler said.

        While lawmakers reexamine options, the Ohio Supreme Court expects to see a school funding reform plan June 15. The question now is how much will the governor and leaders take away from state agencies to meet that order.

        “It just is going to be painful,” said Sen. Jeff Jacobson, R-Brookville, a member of the Senate Republicans' school funding team. “We always knew it would be more painful than a tap on the knee and less painful than being guillotined. But it's getting closer all the time.”

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