COLUMBUS, Ohio — Most Ohioans would see their state income taxes cut, especially those making less than $88,800, under a state budget proposal unveiled Thursday by Ohio House Republican leaders. The cuts would be paid for in part by eliminating other tax breaks that generally favor businesses and wealthier state residents.

The budget plan, which changes an earlier state budget plan from GOP Gov. Mike DeWine, would eliminate Ohio’s second-lowest and third-lowest tax bracket. That means people with taxable incomes of $22,250 or less would no longer have to pay state income taxes. The tax rate on the next $66,000 in income would be cut by 4.7%.

The tax cut would be paid for in part by scaling back a state business tax exemption so that it applies to the first $100,000 of business income, rather than the first $250,000. It also eliminates a grab bag of tax exemptions and tax credits — including the state motion picture tax credit — and closes a loophole that allowed some filers claiming business income to take an exemption intended for poor Ohioans.

The budget still has a long way to go — House Speaker Larry Householder said he plans to get a version through the House next week, with the Republican-controlled Senate taking a crack at it after that. After the two chambers agree, it then would head to DeWine’s desk for his signature, although the governor could still veto individual line items.

The budget is due on June 30.

Overall, the tax changes in the budget represent a net $100 million tax cut, according to Householder, a Perry County Republican. DeWine’s budget plan, introduced in March, contained no tax increases, but also contained no tax cuts.

It also increases spending on education while setting aside extra money that can be used in the future for a school-funding formula overhaul House members are working on, expands free-lunch programs and doubles state funding for child-protection services agencies, a $60 million annual increase.

It pays for everything in large part by wiping out most of a $900 million “H2 Ohio” water-quality fund that DeWine had proposed. But the plan isn’t necessarily dead — Householder told reporters he will propose funding the program through borrowed money sometime in the near future.

“We live in a time of prosperity,” Householder said in a statement. “But for too many Ohioans, that prosperity remains out of reach. That’s especially true in our urban and rural communities alike. One of our top priorities in this budget has been to empower all Ohioans, regardless of their ZIP code or circumstances.”

In an email, DeWine spokesman Dan Tierney said the governor’s budget team and agency directors are reviewing the House budget plan.

“We appreciate that House Leadership, through their substitute version of HB 166 [the state budget bill], supports including funding for the governor’s proposed H2Ohio initiative for the upcoming biennium,” Tierney said.

Here’s some more detail on what’s in the plan:

Wraparound services

The House plan expands DeWine’s spending proposal on “wraparound” support programs targeted at at-risk students from $550 million over two years to $675 million, using the extra money to target rural students.

Rep. Bob Cupp, a key state lawmaker who’s been working on the school-funding formula overhaul, said the extra money will serve as a bridge until the new plan is in place, something Householder said he’d like to do sometime in the next two years, and possibly even sooner. The rural targeting will work by factoring in the presence of nearby agricultural land when determining student eligibility, Cupp said.

“I haven't lost my enthusiasm for trying to change that funding formula and making it a better formula,” Householder said.

H2 Ohio fund

It wipes out all but roughly $85 million of the $900 million DeWine had proposed setting aside for an “H2 Ohio” fund for programs protecting Lake Erie and other state waterways. (The $85 million was allocated in DeWine’s budget plan for water quality protection programs, while the rest was to have been set aside for future use.)

But that doesn’t necessarily mean H2 Ohio won’t happen. Householder said he plans to introduce legislation that would borrow that money in the future rather than paying for the fund out of general state revenues.

DeWine had argued that paying for the H2 Ohio fund out of the state’s general revenues would be cheaper than paying to borrow money. But Householder said borrowing would prevent future lawmakers from raiding the fund — an argument that had been made by environmentalists and farmers who had pushed for the fund during last year’s election campaign, and viewed DeWine’s proposal with some wariness.

“We could have allocated the [entire H2Ohio funding] this biennium, but next biennium, the economy goes south on us and we don’t have any money to put into H2 Ohio. So, this is something that could be recurring on and on and on, and is something we think is a legacy for the State of Ohio,” Householder said.

Democrats take credit for tax changes

The Republican House plan eliminates a number of tax breaks that have been criticized for years by conservative and liberal activists as being costly, unfair and/or unnecessary.

They include eliminating sales tax breaks on sales to motor racing teams, the purchase of flight simulators and gold coins and bullion, on aviation repair and maintenance, as well as maintenance and repairs on fractionally owned jets.

The plan also would close a loophole that allowed business income filers to claim a deduction intended for poor Ohioans, and ends the state motion picture tax credit, as well as tax credits for political contributions.

“I'm a believer that when you look at tax policy, that we shouldn't try to pick winners and losers,” Householder said.

House Democrats took credit for some of the other budget changes, which they had advocated for earlier this year as part of their overall policy priorities. Even though Householder is a Republican, he was elected to his leadership position in January with Democratic support, which has given Democrats additional leverage during the current legislative session so far.

“I am proud of our Democratic members and their work to make this a better budget by including our key tax priorities,” said Minority Leader Emilia Sykes, an Akron Democrat. “Walking back a tax system rigged against working people will help our state better live within our means and let working families have a better chance to get ahead. This draft is a more realistic blueprint for our state’s future.”

The Republican budget plan also directs the state to begin collecting sales taxes on online purchases, as well as directing ride-share services like Uber and Lyft to collect and remit sales taxes on behalf of drivers.

The proposal to scrap the motion picture tax credit drew an immediate reaction from the Greater Cleveland Film Commission, which asked its supporters in an email to urge lawmakers to reconsider.

It pointed to a report that “nearly 35,500 people are directly and indirectly (hotels, caterers, carpenters, dry cleaners, etc.) employed by the motion picture and television industries in Ohio, with total wages earned exceeding $1.2 billion.”

Revenue forecasts cloudy

It wasn’t immediately clear how Thursday’s budget plan reconciles a $550 million difference between how much DeWine’s budget team think the state would have to work with, versus what the state legislature’s researchers think. The difference largely is over state income-tax forecasts, although early tax returns have supported the DeWine team’s rosier projections.

Still, Householder said the House budget plan is conservative when it comes to projecting how much revenue the state will take in, and then building its plan from there.

“We’re very encouraged by the economy in the state of Ohio right now, and the revenues that are coming in currently,” Householder said. “And we think that you know it’s going to go for a while like this, but we want to be prepared.”

The House Finance Committee will hold its first public hearing on the budget plan on Friday, the committee’s chairman, Canton GOP Rep. Scott Oelslager said.