LIMA, Ohio (AP) -- Gov. John Kasich said Tuesday during his third State of the State speech that Ohio has seen wholesale improvements since he took office but now is not the time to "rest on our laurels."
Making the case for his latest round of sweeping policy proposals in the upcoming budget, Kasich told lawmakers, invited guests and a television audience that big changes he's made to government so far are showing results.
"We must not fear big ideas. We must embrace them," the Republican governor said in a speech before about 1,700 at Lima's Civic Center. "We can debate them, but at the end of the day, big ideas will renew us, they will restore us."
Kasich is pushing for support of several key proposals in his $63.2 billion, two-year budget -- including his plan to overhaul the state's tax code and school funding, plus expand Medicaid under the federal health law.
State lawmakers of both parties expressed reservations after the speech about aspects of Kasich's plan -- Republicans primarily over expansion of Medicaid, a state-federal health insurance program, and Democrats about the school-funding proposal, which they say doesn't do enough for poor districts.
State Sen. Nina Turner, a Cleveland Democrat, called the governor's funding plan "a slap in the face" for her city and its students.
"What are the students and the children -- the 1.8 million of them -- what are they guaranteed in this budget in the state of Ohio?" Turner asked. "As far as I am concerned, not enough. And we need to step up to the plate."
Senate President Keith Faber also expressed concerns with the governor's funding formula, but he said he agreed with the concept of the plan.
"We just need to make sure that there's not unintended consequences that frankly cause problems for districts that are not wealthy" and are doing a good job, said Faber, a Celina Republican.
Kasich cited JobsOhio, the private nonprofit job creation agency that's faced a persistent constitutional challenge, as a vital economic driver that's diversifying Ohio's economy from just one or two sectors to include bio-health, auto manufacturing, financial services, aerospace, information technology, agri-business and energy.
The administration has also seen the state workforce drop to its lowest levels in 30 years, he said, and reduced redundancy and revitalized worn-out programs using private-sector management techniques.
All that, the governor argued, has gotten the state noticed across the world -- including at the recent Global Economic Forum in Davos, Switzerland.
But Kasich said now isn't the time to let up.
"Should we just rest on our laurels? That's what most people think, when we pull out of the depths of where we were, just kind of relax," he said. "Well, we're going to keep our foot on the gas."
Kasich's plans include overhauling Ohio's tax code to reduce rates for sales, income and small-business taxes; broadening the sale tax base to include a laundry list of new services; and raising the severance tax on high-volume oil and gas drillers swarming the eastern half of the state.
Kasich also encouraged lawmakers to support his decision to expand Medicaid. The state would see $2.4 billion from Washington to cover those newly eligible for Medicaid over the next two years beginning in July. Kasich said the action is vital to help Ohio's safety net for the poor, and particularly for the mentally ill.
"Some of them live under bridges, some of them live on streets, some of them are in our jails tonight," he said in a moment that hushed the crowd.
He pleaded with lawmakers, some from his own party who opposed the federal health care mandate and oppose expanded government, to examine their consciences and keep an open mind.
The governor's pitch to expand Medicaid has split members.
House Democratic Leader Armond Budish said the state needed to make the move to extend coverage, and Democrats were open to working with the administration on the proposal.
State Rep. Brian Hill, a Zanesville Republican, said he hasn't made up his mind on the idea.
"I think it's something we need to evaluate," he said after the speech. "The governor made some compelling arguments."
Kasich also used the speech to defend the merits of his new school-funding formula, which delivers $1.2 billion more to K-12 education by first raising base funding, then providing add-ons for the poor, disabled, gifted and other categories of students. He called it an objective plan that applies equally to all districts based on their property tax wealth, residents' income and individual characteristics of students they serve.
All these policies are intended to create jobs, Kasich said -- something he characterized as "our greatest moral purpose." In Lima, a city with drastically reduced unemployment and 3,200 new private-sector jobs, Kasich found a "shining example" for the state.
Despite the protests of a handful of demonstrators outside the speech, he said his tax and spending changes aren't about political leanings -- they're practical.
"This is not ideology. This is just the way the world works," he said.