John Kasich

Ohio Gov. John Kasich on Monday released his final state budget proposal.

(Carolyn Kaster, AP Photo)

COLUMBUS, Ohio -- Gov. John Kasich unveiled a budget proposal Monday that further reduce the state's reliance on income tax revenues by raising taxes on cigarettes, alcohol, goods and services and oil and gas drillers.

The budget appropriates more than $144 billion over two years -- including $66.9 billion from the state's general revenue fund. A proposed 17 percent cut in personal income taxes is offset largely by a $1.9 billion increase in sales taxes over two years.

Kasich has publicly cautioned lawmakers, lobbyists and local business officials for weeks that this budget will have little room for spending increases because state tax revenues have been lower than expected. But he's also said he won't be a lame duck and his last budget proposal has plenty of policy initiatives to help fulfill that promise.

No one knows how many of those proposals will stick once lawmakers start reviewing the budget.

The Ohio House will begin budget deliberations Wednesday, and the Senate will have its turn to revise it this spring. By law, the state budget must be approved by the General Assembly and signed by Kasich by June 30. The 2018 fiscal year begins July 1.

The proposed tax increases are likely to face opposition in the GOP-controlled General Assembly. House Speaker Cliff Rosenberger, who said last week he didn't support tax shifting, said he looked forward to reviewing the proposal.

"Governor Kasich has issued a budget proposal filled with bold, innovative ideas and I commend him and his team for their work," Rosenberger said in a statement.

House minority Leader Fred Strahorn said Kasich's proposal doesn't square with his warnings of gloom and doom.

"Tax shifting from the wealthy few to the working and middle class has sidelined Ohio, and predictably failed to bring back middle-class jobs," Strahorn, a Dayton-area Democrat said in a statement.

Tax reform

Kasich is proposing several changes to Ohio's tax system resulting in a $39 million tax cut over two years:

Raising the sales tax rate

Expanding the number of goods and services where sales tax is applied.

Raising

Raise the tax on cigars and other tobacco products to the cigarette rate.

Raise taxes on beer and wine.

Set taxes for crude oil and natural gas pulled from Ohio soil at 6.5 percent at the wellhead and 4.5 percent for natural gas and natural gas liquids.

Kasich is proposing reducing the number of income tax brackets from nine to five and decreasing the top bracket rate from 4.997 percent to 4.75 percent in 2017 and 4.33 percent in 2018.

The proposal also boosts the personal tax exemption for low- and middle-income Ohioans earning up to $80,000 a year.

And to help streamline the process for businesses paying income taxes in several municipalities, Kasich is proposing they use a single form and payment online through the Ohio Department of Taxation.

Technology

Kasich is proposing a new leadership position, chief innovation officer, to make sure Ohio stays ahead of the curve with new technology. The CIO would oversee a new Ohio Institute of Technology. The office, backed by $750,000 a year, would align research from private and public sources with the state's business interests in engineering, aerospace, robotics and the biomedical industry.

The budget also seeks to create a "cyber range" for cybersecurity training and testing IT infrastructure to strengthen technology used by state agencies, local governments and schools.

Higher education

The budget freezes tuition at Ohio's public colleges and universities for two years and requires schools to provide textbooks for students. Schools could charge up to $300 per student to offset those costs.

K-12 education

As promised, the budget proposes school district superintendents appoint three, non-voting ex-officio business people to the school board. The goal is to better communicate local job needs.

The budget increases school funding by nearly $130 million next year and $160 million in 2018, an increase of 1.2 percent in the first year and 1.4 percent in the second.

Districts that have lost more than 5 percent of their student population from 2011 to 2016 would see less funding.

District-by-district funding amounts were not available Monday.

Health care

Again, Kasich is proposing monthly premiums for some enrollees in Medicaid, the federal- and state-funded health insurance program for poor and disabled people. Childless, non-pregnant adults with incomes above the poverty line would pay approximately $20 per month, which is expected to save the state about $200 million over two years.

The budget allocates an additional $122 million over two years toward efforts to serve people with developmental disabilities, including waivers for people who prefer to receive care at home.

The budget increases spending to prevent infant deaths by $6 million over two years.

Medicaid sales tax replacement

Kasich proposed a new tax to replace the sales tax on Medicaid Managed Care Organizations, which is no longer allowed by the feds. Medicaid plans would pay $26 to $56 per member and non-Medicaid plans would pay $1 to $2 per member, generating $615 million next year.

The budget does not replace the funding stream for local governments and transit authorities that were able to piggyback on the sales tax. But it provides $49 million for lost revenue this year and $158 million to help local governments phase out the funding stream.

Follow Kasich's budget unveiling with cleveland.com reporters Robert Higgs and Jackie Borchardt below.