Ohio Legislature passes budget that would tap state's rainy-day fund.

CHICAGO -- The Ohio Legislature yesterday approved a $27.3 billion general revenue fund budget that includes $769 million gained from revenue enhancements and the use of two-thirds of the state's budget stabilization fund during the 1992-93 biennium, which began July 1.

The budget, which calls for spending levels of $13.3 billion in fiscal 1992 and $14 billion in fiscal 1993, was put together by a bipartisan committee of the Legislature and was received positively by Republican Gov. George Voinovich.

In a statement released yesterday, the governor said the state was "on the brink of placing a permanent, two-year budget into law."

But Kent Carson, a spokesman for House Speaker Vern Riffe, D-Portsmouth, said the governor was expected to use his line-item veto powers on the budget. And, Mr. Carson warned, if the governor line-item vetoes a revenue enhancement, he also would have to veto a spending measure in order to keep the budget in balance.

Gov. Voinovich had proposed in March a $26.8 billion general revenue fund budget for the 1992-93 biennium. That budget included about $430 million in spending cuts, $600 million of tax and revenue changes, and the use of $150 million of the state's $300 million budget stabilization fund to avert a projected $1.5 billion budget deficit for the bienium.

With lawmakers remaining split on several issues contained in the governor's plan, the Legislature approved a 30-day interim budget just before fiscal 1991 ended on June 30. The unresolved issues included the use of the rainy-day fund, some of the governor's proposed revenue enhancements, and a remaining $200 million shortfall in the budget.

The compromise hammered out between leaders of the Republican-controlled Senate and the Democrat-controlled House calls for a series of revenue enhancements that will net the state $490.7 million in fiscal 1992 and $290 million in fiscal 1993.

Included in those revenue enhancements is the use of $200 million of the rainy-day fund, which would be replenished with any excess tax revenues collected during the biennium. House Democracts had wanted to use the entire fund to help balance the budget. The revenue shortfall would be made up through the greater use of the budget stabilization fund, as well as by using the state's fiscal 1991 year end fund balance of $135 million.

Democrats were successful in eliminating two of the governor's revenue enhancement proposals: The sale of state liquor stores to the private sector and the administration's plan to eliminate the 1.5% bonus that retail merchants earn from collecting the state sales tax.

Major revenue enhancements passed by the Legislature included capping the percentage of taxes contributed to the state's local government fund, closing loopholes on the taxation of passive investment corporations headquartered in Delaware, and exteding the state sales tax to new areas of products and services.

Primary and secondary schools would receive a slight increase in funding under the budget passed by the Legislature -- $6.14 billion, compared with $6.11 billion under the governor's plan. However, the compromise budget retained Gov. Voinovich's proposal to set up a $50 million school equity fund in fiscal 1993 to address school district funding disparities. Ohio is the defendant in two lawsuits charging the state's school funding formula violates Ohio's constitution.

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