DaytonDailyNews.com

COLUMBUS — Faced with a potential budget deficit of nearly $1.9 billion, Gov. Ted Strickland on Wednesday said he asked agency directors to "find ways to save money" and wouldn't rule out layoffs or closing state institutions.

He did rule out a tax increase, saying it wouldn't make sense with Ohio's "fragile economy." Strickland had earlier asked agency directors to consider developing early retirement plans. On Wednesday he said he wants recommendations on further spending cuts within days.

"The sooner this situation is dealt with the better it will be," he said.

No single economic indicator was blamed for the projected slow growth. The same reasons behind the national slowdown — a declining housing market, higher unemployment, higher energy prices, the slide in the stock market — are in play here, but states like Ohio and Michigan get rocked further because of a recession in the auto industry.

House Speaker Jon Husted, R-Kettering, and Senate President Bill Harris, R-Ashland, agreed that a tax increase is out. Husted suggested possibly tapping into the state's $1.01 billion "rainy day" fund, but that's not an option Strickland favors, said Keith Dailey, his spokesman.

Strickland briefed legislative leaders and statewide officeholders on three budget scenarios — low growth, with a $733 million deficit, zero growth with a $1.299 billion deficit and recession, $1.884 billion deficit. Strickland said he thinks the zero growth scenario is most likely.

The two years for the $52.3 billion state budget began July 1, 2007, and end June 30, 2009.