COLUMBUS — The Ohio General Assembly sent Gov. Bob Taft a $44.9 billion budget Wednesday that tries to walk a tightrope between two of the toughest dilemmas a state government can face.

        Majority Republicans who drafted the two-year spending plan were confronted with a stagnant Ohio economy that drained away new sales- and income-tax revenues. With precious few new dollars on hand, they still had to meet an Ohio Supreme Court order to narrow the funding gap between rich and poor schools.

        The budget they produced gives public schools an extra $1.4 billion over the next two years while virtually eliminating new spending at Ohio universities and other state agencies. Senate President Richard Finan, R-Evendale, praised the measure after his chamber approved it, 21-12.

HIGHER FEES, TAXES

The $44.9 billion budget Ohio lawmakers passed Wednesday doesn't raise taxes. It does however, eliminate some tax breaks and raises several fees that will have nearly every Ohioan paying more. Here's a look.    • Income tax rate reduction: The budget temporarily freezes a program that uses surplus budget funds to reduce Ohio income tax rates. That means a family that earned $40,000 last year will give $93 more in taxes to the state next year.    • College tuition: Lawmakers erased a maximum 6 percent cap on tuition-rate increases at Ohio's public universities and colleges. That means University of Cincinnati students could pay between $50 and $100 more next school year than they expected.    • Vehicle fees: The basic $2.25 fees Ohioans pay to renew their drivers licenses, license plates, for vehicle registrations and title transfers increase to $3 starting July 1.    • New tires: A 50-cent fee the state levies on new tire purchases increases to $1 to help cover cleanup costs at old tire dumps.    • Political contributions: People who donate money to candidates' campaign war chests can no longer claim a state income-tax credit. The change will raise $4.8 million over the next two years.    • Research and development. The budget delays a corporate franchise tax credit businesses could claim to help defray research and development costs. This will help the state collect $40 million to $60 million.

WINNER & LOSERS

With $1.4 billion in new funding, public schools are the big winner in the two-year $44.9 billion budget lawmakers passed Wednesday. Here is a look at state agencies and programs that lost money Gov. Bob Taft originally proposed they spend. Department ... Amount cut (in millions) Higher Education ... $200 Development ... $47.6 Administrative Services ... $27.8 Ohio Bicentennial Commission ... $22

        “This is the best budget we could do under the circumstances,” Mr. Finan said. Under the mandates of the court, we had to provide so much (to schools) that the rest became residual budgeting.”

        Democrats, none of whom voted for the budget, called it the worst they've seen. Sen. Ben Espy, D-Columbus, said flat funding at agencies that serve the elderly, mentally ill, and the mentally retarded will hurt the most.

        “They're treating people like they are throw-aways,” Mr. Espy said. “I don't know where the priorities are anymore.”

        Waiting in the wings is the Ohio Supreme Court, which will start its review of the school-funding plan June 15. If four of the seven justices aren't satisfied, they could order lawmakers back to the blackboard.

        The school funding plan lawmakers approved would boost state aid to school districts from $4,294 per pupil this year to about $4,814 per pupil next school year and $4,949 the following year.

        It also provides $300 million in so-called parity money that would be used to help correct the imbalance of funding between property-poor and property-rich districts. Officials said 489 of 612 districts would get a cut of this parity aid.

        The school-funding plan costs about $600 million more than the $808 million Mr. Taft originally provided for in his proposed budget.

        Bill Phillis, leader of a coalition of schools and educators that has twice successfully sued the state over its funding formula, said the high court should reject the Legislature's plan a third time.

        The Coalition for Equity and Adequacy of School Funding has said the plan fails to set aside money to put enough computers in grades six through 12, leaves gifted children without enough programs, and doesn't provide the $300 million needed to properly fund special-education classes.

        Though $1.4 billion is a lot of money, Mr. Phillis said it falls far short of a $3.2 billion plan House Republicans initially proposed. That $3.2 billion proposal, which was linked to installing slot machines at Ohio race tracks, was the only one the coalition has ever supported.

        “That plan addressed every area of concern,” Mr. Phillis said. “When you look at the (current plan), not much has changed.”

        Though Mr. Taft has yet to sign the budget and its school-funding plan, attorneys employed by Ohio Attorney General Betty Montgomery are preparing to defend it.

        “They're beginning to build their arguments,” said Joe Case, spokesman for the attorney general. “We've got boxes and boxes of information our attorneys have to scour through and we've got to do it, basically, in three weeks.

        “Until the governor signs it, we don't have a final product to work with,” he added.

        The governor is expected to sign the budget bill next week, possibly by June 15, said spokeswoman Mary Anne Sharkey. Though he supports the Legislature's school-funding plan, Ms. Sharkey said Mr. Taft has concerns about spending rollbacks and funding changes at other agencies.

        Ms. Sharkey said the governor opposes cuts to a higher-education program called Access Challenge, which helps colleges and universities keep tuition costs down. What he'd do about that was not clear.

        Higher education was the biggest single loser in the budget. Lawmakers searching for more money for schools at first took away more than $150 million Mr. Taft wanted for Access Challenge and other university initiatives. Early Wednesday, lawmakers cut away another $65 million to help cover rising Medicaid costs.

        The Legislature also erased a 6 percent cap on tuition increases, raising the likelihood that universities will try to cover their losses by charging students more.

        Ohio Board of Regents Chancellor Roderick Chu said the changes will make higher education less accessible while diminishing its quality. He said a less educated work force means Ohio will slip further behind other states in its ability to attract high-tech businesses and jobs.

        “We're disappointed that (lawmakers) could not find the resources to move Ohio's economy and our prospects forward,” Mr. Chu said.

        Ohio's souring economy and spiraling Medicaid costs also caused lawmakers several problems. The search for school funding solutions was hampered at least twice by reports the state would get lower than expected sales- and income-tax revenues.

        And on Friday, budget officials told lawmakers to make another $146 million in cuts to cover higher than expected Medicaid expenses.

        “Since we started this budget, we lost almost $1 billion we thought we'd have. That's $1 billion,” Rep. Jim Trakas, R-Independence, told fellow lawmakers before the chamber approved the budget 59-37.

        While most state agencies must deal with little to no funding increases over the next two years, taxpayers will find themselves paying more, too.

        The budget puts a one-year freeze on a state program that uses surplus budget funds to lower state income tax rates. A 7 percent rate cut this year shaved $93 off the taxes for a family that makes $40,000 a year.

        That $93 goes to the state next year. Many officials said this is not a real income tax increase because Ohio's permanent tax rates do not change.

        The question now is what the Ohio Supreme Court will do. Some Republicans can't wait for the answer.

        “The question is, when you don't have what you want, can you get by with what you have?” Mr. Trakas told the House. “I think the answer here is yes.”
       

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