(Columbus) - Republican House leaders are dropping Gov. John Kasich's plan to expand Medicaid under the federal health overhaul to cover thousands more low-income Ohioans. 

House lawmakers jettisoned the idea from their version of the two-year, state spending blueprint, which they released Tuesday. 

Kasich frames his support for expanding Medicaid a way to recapture Ohio taxpayers' federal money and help the state's most vulnerable get health care. 

Rejecting expansion means the state would forgo $13 billion from the federal government over the next seven years to cover those newly eligible for Medicaid. 

Many GOP lawmakers are averse to Democratic President Barack Obama's law and resistant to expanding government programs. 

House Speaker William Batchelder said there was a lack of clarity from Washington around the regulations under the law.

"We really have to take the posture that at this point in time we cannot have a position on that," he said.

The House version also removes a hike of the severance tax on oil and natural gas removed from the state. Kasich says it currently amounts to 20 cents on a barrel of oil, but the oil and gas lobby says raising it could hurt the industry. Batchelder agrees.

"We have a lot of people who are looking to come to Ohio and I don't think we want to put up a 'get out of here' sign," he said.

Kasich's budget proposed dropping income taxes by 20 percent, but the House version only cuts personal income taxes by 7 percent. It will cost about $1.5 billion.

"That is paid for out of the fact that the Administration has been so effective managing this budget that we actually have revenue growth that isn't being spend entirely," said Rep. Ron Amstutz, a Wooster Republican who chairs the House Finance Committee.

The House also reworked the Kasich K-12 education funding plan. Amstutz says it shows that a "substantial" majority of the state's school districts get an increase next year and the year after over what they are seeing this year. 400 districts would have seen no new money under the Kasich plan. That drops to 175 under the House spending blueprint.

"We think we have something pretty close to a workable, sustainable, defensible, long-term solution here," said Amstutz, though he admitted not every educator would be on board with the plan.

Amstutz also said there seems to be a lot of interest taking Ohio's tax code to more of a consumption based tax than an income based tax.

When it comes to General Revenue Fund spending, Amstutz says the House version of the budget compared to Kasich's spends about $350 million less in the first year and $1.48 billion in the second year.

In a statement, Kasich spokesman Rob Nichols listed several accomplishments since Kasich took office.

"He remains deeply committed to advancing his proposals to build a jobs-friendly climate that will keep Ohio among America’s top job-creating states. Encouraged by the progress made on parts of his plan so far, the governor looks forward to continuing to work with the General Assembly to pursue the reforms we need to keep Ohio moving forward,” Nichols wrote.

The top House Democrat, Rep. Armond Budish of Beachwood, said he's disappointed in the decision to pull Medicaid expansion from the budget.

“Despite the widespread, bipartisan support for this proposal, House Republicans have decided to stand with a group of right-wing extremists who care more about ideological purity than commonsense solutions. If this decision stands, Ohioans in need of coverage will suffer, Ohio’s thriving healthcare industry will be undercut and Ohio taxpayers will have to plug a huge budget hole," he said.

Budish said Democrats will likely introduce the bill as a stand-alone piece of legislation.
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