It's a two-year spending plan that erases an $8 billion deficit left by the Strickland administration, doing so without raising taxes, a campaign pledge by Gov. John Kasich that many doubted was possible. But it also is a transformational budget containing fundamental policy changes.

Kasich is expected to sign the bill this afternoon. When he does, his administration will be equipped to tackle and resolve tough issues that past governors and lawmakers have allowed to fester.

While the funding cuts to local government, primary and secondary schools and higher education will be painful, the new economic realities faced by the state and nation make them unavoidable. Most important, the budget provides ways for all public entities to serve the public more efficiently, with less reliance on ever-escalating taxes.

It will reset government spending to a baseline that taxpayers can afford.

Senate President Tom Niehaus, R-New Richmond, summed it up well: "We cannot continue doing business the same old way." Under this budget, Ohio won't.

Local governments will have to adjust to $630 million in direct funding cuts over the two-year budget period, but they'll do so with new tools at their disposal, including a $50 million fund that will give grants to support local governments' efforts to save money through cooperation and consolidation.

School districts will see $700million cut from the funding of kindergarten-through-12 {+t}{+h}-grade education, and colleges and universities will receive $250 million less over two years.

Chief among the beneficial policy changes is an end, at last, to a ridiculous set of rules for public construction that have added hundreds of millions of dollars to the cost of building schools, university facilities, municipal buildings and the like.

The change means public builders no longer will be required to contract separately with four major contractors for plumbing, heating and cooling, general construction and electrical work.

It was an archaic practice, long abandoned by every state but Ohio, which inflated the cost of projects by 5 percent to 15 percent because four contractors working independently produce delays, errors and conflicts that sometimes ended up in court.

The old "multiple-prime" system was favored by major contractors who benefitted from it; several previous attempts at construction reform were rebuffed by governors and legislators who ignored the clear public interest in it.

Also on the long-overdue list is a significant adjustment in taxpayer support for nursing homes.

A powerful nursing-home lobby managed over the years to win some of the highest reimbursement rates in the nation. As a result, Ohio has spent too much of its Medicaid-funded long-term-care budget on nursing homes as opposed to in-home care, which is far less expensive and preferred by many seniors.

Even after being held essentially flat for several years, the average daily reimbursement rate of $177.53 per day is $4.75 above the national average. The budget cuts that rate to $167.25, a reduction of 5.8 percent.

Overall, nursing-home funding could decline by $340 million to $370 million over two years. State Medicaid officials expect fewer Ohioans to go into nursing homes, and the extent of that decline will affect the total savings.

On the important question of evaluating and compensating teachers, the budget provides a good start toward the merit-based pay system that would encourage the most-talented teachers to enter and stay in education.

Although the budget doesn't require teacher pay to be based on merit, it does start schools down that path by requiring them to adopt by July 1, 2013, a teacher-evaluation method to be developed by the Ohio Department of Education.

Under that system, for which the department must have a framework at the end of this year, at least half of the evaluation must be based on improvement in student performance - the bottom line in education. Evaluations also must include at least two 30-minute classroom observations of each teacher and must be yearly.

Even without mandatory merit pay, the new evaluation system will have a huge impact, as schools must use it to determine whether teachers are fired, kept on or promoted. When promotions are considered or school-district budgets require teachers to be laid off, using merit-based evaluations to make the decisions will serve students far better than relying primarily on seniority, as is now the case. Those districts participating in the federal Race to the Top grant have pledged to establish merit-pay systems; the budget-mandated evaluations will complement that effort.

Lawmakers and the governor also rejected an effort by two for-profit charter-school companies to rewrite charter-school law in ways that would have drastically reduced public oversight and accountability.

Kasich and this legislature came into office in January facing a disaster: an $8 billion deficit left by former Gov. Ted Strickland and lawmakers who failed to put the state on a sustainable fiscal basis by matching spending with revenue. Instead, they kicked the problem down the road, using federal stimulus money to paper over the problem.

Putting the state back on a sound fiscal foundation, with the tools to keep it that way for the foreseeable future, is an extraordinary accomplishment.