By STEPHEN OHLEMACHER and SANDY THEIS
PLAIN DEALER BUREAU

COLUMBUS - A plan to help fund Ohio’s schools with slot machines at horse racing tracks died yesterday, raising new questions about how to pay for any substantial increase in state spending on public education.

Gov. Bob Taft, who already has ruled out a tax hike for schools, said he would veto any effort to install the slot machines, also known as video lottery terminals, at state-regulated race tracks.

The decisive statement from the usually cautious governor instantly changed Ohio’s school-funding debate.

Speaker Larry Householder conceded that it all but kills his plan to increase state spending on education by $3.2 billion over the next two years. A coalition of schools that successfully challenged the state’s current funding system in court predicted the legal battle would continue. And budget cuts emerged as the only apparent way to increase state money for schools.

"I’d be less than candid if I didn’t say probably we’re going to have budget cuts," Senate President Richard Finan, a suburban Cincinnati Republican, said yesterday.

After a week of public sniping over their rival school-funding plans, Taft, Householder and Finan met privately for an hour yesterday to resolve their differences and map out a system for merging the three plans.

Taft said parts of each would be used, but, "none of the plans currently proposed will be the final product."

At a joint news conference after the meeting, the trio described the discussions as frank and spirited. But Finan said there was no yelling.

"We’re not yellers," Finan said. "It’s only at your kids that you do that."

Each of the leaders has assigned staff members to take part in daily meetings, which the three officials said they would attend, too. The group began work yesterday, racing to meet the Ohio Supreme Court’s June 15 deadline to pass a constitutional funding plan.

Taft will be represented by his tax commissioner, budget director and chief policy adviser - the same group he asked last year to craft a new funding proposal.

Taft rejected their suggestion after public criticism, largely from Republican lawmakers who argued it would shortchange suburban schools.

All three leaders predicted they would meet the June 15 deadline and said the state was not starting the school-funding debate all over again.

"We now have a road map, and the [school] coalition has finally said, This is what it’ll take,’" Householder said. "We didn’t have that before."

Bill Phillis, executive director of the school coalition, had endorsed the House plan and warned that its demise would probably continue the 11-year-old court case.

"Taft and Finan and Householder, they all know what it takes to end the lawsuit. If they don’t want to, that’s their problem," Phillis said.

Last week, Householder proposed the most expensive school-funding plan to date, paid for in part by installing up to 1,500 slot machines at each of Ohio’s seven horse racing tracks. Householder had estimated that the machines would raise $900 million over the next two years.

Taft killed the idea by saying, "I am opposed to VLTs without a prior vote of the people, because I feel that they really amount to a casino at the race tracks." He noted that Ohio voters twice rejected casinos in the 1990s.

Finan, who had supported the video lottery terminals, proclaimed it "a dead issue."

Householder backed down, too.

"The governor has an eraser at the end of his pencil, and we realize that," Householder said, referring to the governor’s veto power.

Anti-gambling groups praised the veto threat.

David Zanotti, who heads the Cleveland-based Ohio Roundtable and Freedom Forum, said he was encouraged by yesterday’s developments but was still wary of future attempts to expand gambling in Ohio.

"We’re looking for trap doors from the gambling industry," Zanotti said.

Lobbyists who promoted the slot machines continued to make their case.

Neil Clark, who represents race tracks and slot-machine manufacturers, released a poll yesterday that he said showed a majority of Ohio voters would support the slot machines - if money from them is earmarked for schools. Clark’s firm paid for the statewide poll of 600 registered voters conducted Friday, Saturday and Sunday.

And Scott Pullins, executive director of the Ohio Taxpayer’s Association, said he feared the demise of the machines would increase pressure to raise taxes.

Of the three school-funding plans under consideration, Taft’s plan is the only one that is fully funded. It would increase state spending on education by about $800 million over the next two years.

The Senate plan would increase spending by about $1.3 billion over the next two years, and the House plan would add about $3.2 billion over the next two years.

School-funding experts have already said Taft’s plan and the Senate’s plan would not pass constitutional muster.

The House plan has not been public long enough for a full review. Still, it received support from the Coalition for Equity & Adequacy, the group of more than 500 of the state’s 612 school districts that is suing the state to improve its system of funding public education.

The lawsuit has resulted in two Ohio Supreme Court rulings, the latest in May 2000, that Ohio’s system of paying for public education is unconstitutional, mainly because it relies too heavily on local property taxes, creating huge disparities.

Warren Russell, deputy executive director of the Ohio School Boards Association, said it was a shame to lose out on an opportunity to end the court battle.

"It’s been 11 years of litigation, and it’s time to settle this," Russell said. "Now, we’ll have to see what the product is that goes to court."

E-mail: sohlemacher@plaind.com

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