By Andrew Welsh-Huggins
The Associated Press

COLUMBUS - Ohioans would pay more on everything from buying a car to having it towed under a proposed two-year budget sent Friday to Gov. Bob Taft.

The House and Senate, both controlled by Republicans, anticipate the new taxes will bring in more than $3 billion in two years to help balance the $48.8 billion spending plan.

Schools would see a modest funding increase and be under increased pressure to boost enrollment. The budget also provides a small increase for universities, who said the funding doesn't meet a projected rise in enrollment.

The House voted 53-46 to approve the budget early Friday, with eight Democrats - all members of the Black Legislative Caucus - joining Republicans. One of those caucus members was State Rep. Tyrone Yates, D-Cincinnati.

The Senate approved the budget 22-10, with six Democrats joining Republicans, including Sen. Mark Mallory, D-Cincinnati. Six Senate Republicans voted against it. Among them was Sen. Robert Schuler, R-Sycamore Township.

Republican Gov. Bob Taft said he was pleased with the plan. The governor, who can veto individual items, is going through the budget line by line, said spokesman Orest Holubec. Taft must sign the budget by July 1, the first day of fiscal year 2004.

A sales tax increase raises the statewide amount from 5 percent to 6 percent. Most counties add another 1 percent.

Ohioans will also start to pay the sales tax on previously untaxed services, such as renting a storage locker, towing a car and having clothes dry-cleaned.

Much of the budget makes changes in the way school districts receive money, which has many educators worried about the future.

"It's going to force schools back to the ballot, no question about it, over the long term," said Joseph Regano, superintendent of Solon schools in suburban Cleveland.

While basic aid for students grows, as does money to close the gap between rich and poor districts, both were less than what Taft requested for schools.

Lawmakers also changed the way schools count students, a move that could help districts with growing enrollment but hurt schools with falling enrollment.

"We just can't keep up, we can't get out of this hole," said Fremont schools Treasurer Matt Feasel. He predicted his district would lose $226,000 next year because he will no longer be able to average enrollment over three years.

The three-year average, meant to soften the financial blow for districts losing students, changed to a one-year average.

Schools are upset about the phase-out of revenue they receive for taxing local businesses.

One proposal eliminates a state reimbursement for a tax exemption businesses receive on equipment. The plan will ultimately cost districts up to $70 million annually.

Overall, the budget spends $7.15 billion on schools next year, an increase of about 2.3 percent.

The budget also provides a small increase for universities, which said the funding doesn't cover the cost of inflation or a projected increase of 13,000 students this fall.

Almost 37 percent of the record spending plan - or about $18.1 billion - will be spent on social services for poor Ohioans.

Medicaid spending will be a record and drew warnings from Republicans that growth in spending on social services must be slowed.

"We're on a journey to destruction if we don't do something about Medicaid expenditures," said Rep. Chuck Calvert, a Medina Republican and chairman of the joint legislative committee that worked out differences between the House and Senate versions of the budget.

Rep. Tim Grendell, a conservative Republican from Chesterland, called the proposal an "unpardonably destructive measure."

"Tonight we're reaching into the pockets of taxpayers because we still have a spending addiction here in Columbus," Grendell said.

Some highlights of changes to education funding and policy contained in the state's proposed two-year budget beginning July 1:

Allows students who participated in Cleveland's school voucher pilot program as elementary students to continue the program in Grades 9 and 10. Vouchers for high schoolers cannot exceed $2,700 per student.

Changes Ohio's current school funding method, which relies on a one-time head count in October and averages that over three years. In the future, schools would count students twice, in October and March, and use a one-year average. The goal is to get a more accurate picture of student enrollment and give districts an incentive to boost attendance.

Shifts about $18 million in additional taxpayer dollars to charter schools each year. The money, meant to close the gap between rich and poor districts, is called parity aid.

Cuts funding for Gov. Bob Taft's OhioReads program from $26.5 million this year to $12.9 million July 1 and $12.8 million the following year.

Eliminates the Seniors Teaching and Reaching Students program that pays seniors a small hourly wage to tutor schoolchildren.

Allows Miami University to begin a plan to charge Ohioans the same tuition as out-of-state students at its main campus next year to help offset a drop in state funding.