By Spencer Hunt
Enquirer Columbus Bureau

COLUMBUS - In the face of monster deficits, Ohio state leaders raised billions in new taxes and cut funding for schools and health-care programs.

They did such a good job, the government just ended its business year with $180.7 million in the bank.

Gov. Bob Taft's budget managers said they were pleasantly surprised by the newfound surplus, and announced plans to put that money in the state's nearly drained rainy day fund.

"It's our desire to have that in there as a cushion," said Budget Director Tom Johnson.

"It's a very small amount," he added, referring to the fact that the $180.7 million surplus amounts to less than 1 percent of the state's newly passed $48.8 billion two-year budget.

Lawmakers, particularly Democrats who helped majority Republicans raise the state's sales tax on Tuesday, were upset. Some demanded that the money be spent in Lima, where the state plans to close a prison to save money.

State Sen. Mark Mallory, D-Cincinnati, who has demanded that Johnson resign over his inability to foresee tax revenue deficits, said last week that he should now step down because he overestimated the most recent crisis.

"It's very difficult to design a state budget without a sense of how much money you've got," Mallory said.

Johnson warned weeks ago that the state would end the month of June $200 million short. He blamed the shortfall on lower-than-expected income and sales tax revenues, and higher than expected health-care costs.

That $200 million deficit led to projections of a new $1.1 billion deficit over the next two years that started July 1.

Last week Johnson said the state collected $77 million more in income and sales taxes than expected. He also said state agencies were able to save $103 million they otherwise could have spent.

"At the very last, (tax) revenues broke our way," Johnson said.

Are the higher tax revenues a sign of better budget times for Ohio? Johnson said one month's take is not a trend.

"It could mean a lot of things. It could be a timing issue or it could mean we're on to a (economic) recovery," he said. "It's too soon to tell."

E-mail shunt@enquirer.com