PLAIN DEALER BUREAU CHIEF

COLUMBUS - Gov. Bob Taft's new budget plan calls for Ohio to join a multistate lottery to revive sagging revenues and bolster funding for schools.

The document also proposes funding cuts for some agencies and a shift of state resources from nursing homes to programs that help senior citizens remain independent.

He is scheduled to unveil his two-year, $44.8 billion spending plan at a news conference tomorrow morning. The Plain Dealer obtained excerpts of it yesterday.

It calls for Ohio to spend $21.8 billion in the budget year that begins July 1 - a 1.6 percent increase over estimated spending this year. In the second year, Ohio would spend $23 billion, or a 5.5 percent increase over the previous year.

The General Assembly has until June 30 to pass Taft's plan, its own or a compromise.

The budget reflects Ohio’s slowing economy, aging population and continued pressures from court-ordered changes in the way Ohio pays for its public schools.

"Because of my commitment to fund schools first and the realities of a slowing economy the budget for the rest of state government will be challenging," Taft says in a letter to the Ohio General Assembly that will accompany the massive budget proposal. "In many cases, agencies will receive less ... than is currently appropriated."

Those hardest hit are expected to be the prison department, agencies that serve the mentally ill and developmentally disabled and the Ohio Department of Job and Family Services. Cabinet directors, briefed on the stark budget last week, said they hoped to avoid layoffs.

The lean budget follows warnings from Taft’s economic advisers that slower growth and higher unemployment loom, and it comes as sales and income taxes are falling below projections.

Taft hopes that his proposed expansion of the Cleveland-based Ohio Lottery will help generate more money for state coffers.

Because the budget assumes that Ohio will join a multistate lottery, Taft is issuing a challenge to the General Assembly: Either expand the lottery - something lawmakers have consistently resisted doing - or find another source of money for public schools.

The lottery supports itself through the sale of tickets. It also provides a relatively small but important source of money for elementary and secondary schools.

Taft’s budget projects that the lottery will provide schools with $644.7 million in the year that begins July 1 and $665.7 million the following year. (The annual state funding for schools now tops $8 billion.) The projections are based on the shaky assumption that Ohio will join Powerball or another multistate lottery by March 31, 2002.

Under Ohio law, the lottery must transfer at least 30 percent of its sales to education each year. Taft’s budget calls for the removal of the 30 percent requirement. In the past, lottery officials have argued that the requirement prevents them from expanding their advertising and offering megajackpots that generate more interest - and more money.

Legislators, however, have opposed eliminating the requirement, and Taft’s lottery plan is destined to reignite a debate about the wisdom of expanding Ohio’s only statewide, state-sponsored form of gambling.

Along with a boost in money from the lottery, Taft’s budget calls for earmarking about half of all new dollars to education at all levels.

Complying with the court The Ohio Supreme Court has given legislators and the governor until June 15 to craft an equitable and constitutional school-funding formula. Although the justices did not demand that the state increase spending on schools, most legal experts believe the court won’t be satisfied unless Ohio spends more on education.

Mindful of the court order, Taft is proposing a new formula designed to boost the minimum amount each district must spend on each student annually. The money comes from the state and from local property taxes.

As outlined last week in his State of the State address, Taft also will call for increasing the amount the state pays for school buses and other transportation, all-day kindergarten and special education.

Even before the budget’s official debut, Senate Republicans have made it clear they prefer their own school-funding plan, insisting it would provide more money to schools than the plan offered by the Republican governor.

As Taft confronts resistance from his own party, he also appears poised to ignite a feud with the state’s well-financed and politically powerful nursing-home lobby. Taft’s budget calls for $145 million in additional state spending on programs designed to help the elderly and the disabled to remain in their homes or in assisted-living centers.

Budget officials note that demand for nursing-home beds has been declining. At the same time, three of Ohio’s home-based programs have waiting lists.

The budget briefing book notes that the formula for deciding how much the state pays nursing homes is written into state law, and it indirectly makes the case why that law should be changed.

"As consumers choose alternative settings and nursing facility occupancy declines, the structure of the reimbursement system causes nursing facility rates to rise," the briefing book states.

The rising rates contributed to a $648 million Medicaid shortfall, which Ohio had to address late last year by dipping into a budget reserve and imposing cuts on other state agencies. Taft’s budget will call for a modest expansion of Passport, a popular home-care and support program for people over 60 who would otherwise require nursing home care.

In the current budget year, Passport serves 24,000 people. Taft wants to expand the program to an additional l,300 people in the first year of the new budget and 1,600 the second year. He also will ask the Department of Job and Family Services to pilot a program under which eligible nursing home residents are transferred to assisted-living centers or enrolled in programs that allow them to stay in their own homes.

For those with developmental disabilities, Taft will propose a 1,000-slot expansion of a program that offers home care and support to developmentally disabled people who would otherwise need hospitalization or institutional care.

The House Finance & Appropriations Committee is scheduled to begin budget hearings on Tuesday morning.

E-mail: stheis@plaind.com

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