The state's top lawyer, Attorney General Jim Petro, shifted his focus to budget policy on Thursday and outlined a plan to slash 11,500 state jobs, restructure several state agencies and save $1 billion per year. The next two-year state budget will be put together over the next eight months.

"It's time to move toward rebuilding, instead of just tinkering around the edges," Petro told a gathering of the Ohio Council of Retail Merchants.

He said he also thinks lawmakers should let the 2003 penny sales tax increase expire on June 30. The loss of that $1.3 billion per year, combined with rapid Medicaid growth and the lack of other one-time funds used to balance the current budget, would contribute to a 2005-06 budget deficit - at least on paper - that could reach $5 billion.

Petro said he eventually will unveil a six-part plan to reform government spending and taxation.

He, Auditor Betty Montgomery and Secretary of State Ken Blackwell are the early front-runners to win the 2006 GOP nomination for governor. Gov. Bob Taft is in his second term and cannot run again.

No Democrats formally have announced their intention to run for governor, but names most frequently mentioned include Columbus Mayor Michael Coleman, TV show host and former Cincinnati Mayor Jerry Springer, U.S. Rep. Ted Strickland of Lisbon and former Cleveland-area Congressman Dennis Eckart.

Petro proposes reducing Cabinet positions from 23 to nine, combining the functions of several state agencies and breaking up the Ohio Department of Job and Family Services - a consolidated agency Taft created soon after he came to office in 1999.

Petro also would combine the Ohio Department of Education and the Ohio Board of Regents, eliminating 575 positions and bringing all state education management under one director appointed by the governor.

His total job cuts would reduce the state government's 58,900-person work force by about 20 percent.

Peter Wray, spokesman for the Ohio Civil Service Employees Association, which represents about 35,000 state employees, said Ohio already has a low ratio of state employees per capita.

"If we can find duplication let's eliminate it, but not just for the sake of cutting jobs," he said.

Blackwell called Petro's plan "Taft lite," saying it sounds a lot like what the governor is talking about, only less of it.

Blackwell is pushing for a constitutional amendment on the November 2005 ballot that would require a two-thirds vote of the Ohio House and Senate to raise taxes or increase spending at a rate above inflation plus population growth.

Taft expects to present a new two-year budget proposal to lawmakers in February. Spokesman Orest Holubec had no comment on Petro's proposal.

E-mail jsiegel@enquirer.com