COLUMBUS, Ohio — The Ohio Senate unveiled its first draft of the state’s two-year operating budget this week, including an increase on taxes for tobacco but a decrease in taxes for small businesses.

The Senate plan includes $1.7 billion less spending than the House plan and $1.1 billion less than the governor’s proposed budget.

“This is a balanced budget that invests in Ohio’s priorities, while still making our tax rate more competitive, saving for emergencies and putting millions of dollars back into the hands of the people who earned it,” said Senate President Keith Faber, R-Celina. “We’re continuing to build on our commitment to fund what matters and return what isn’t essential.”

Among some of the highlights in the bill, the Senate plan:

-Maintains the reduction of Ohio’s income tax rate by 6.3 percent that passed the House in April

-Exempts first $250,000 in small business income from the state income tax and imposes 3 percent flat rate on small business income above that amount.

-Eliminates the governor’s proposed income tax on Social Security benefits

-Increases Ohio’s savings account goal, to set aside nearly $2 billion for emergencies

-Reduces the governor’s proposed overall Medicaid spending by more than $1 billion

-Freezes tuition for two years for two- and four-year schools of higher education

-Requires institutions to propose ways to reduce student costs by 5 percent

-Increases state higher education funding by $81.9 million a year over two years, plus an additional $76.2 million in fiscal year 2017

-Reduces state aid to K-12 schools by about $65 million from the House version, but it includes a guarantee no district will fall below its fiscal year 2015 funding

-Imposes a 40-cent increase on a pack of cigarettes and increases the tax rate on other tobacco products from 17 percent to 22.5 percent, and invests $8 million over two years in tobacco cessation programs

-Requires a commission studying Ohio’s tax policy to recommend how to transition the state’s income tax rate to a flat 3.5 or 3.75 percent by 2018.

-Restores funding for Medicaid coverage for pregnant women up to 200 percent of poverty and restores Medicaid coverage for breast and cervical cancer screenings.

-Rolls back a House plan to require that certain Medicaid beneficiaries contribute to a health savings account, while giving more flexibility to the administration in deciding to create such a policy

The Senate’s plan scraps a couple of Republican Gov. John Kasich’s ideas, including a program aimed at reducing college student debt and a proposal to let community colleges offer bachelor’s degrees under certain circumstances.

State senators have added provisions to provide free public transportation to veterans and allow active members of the military to more easily carry a concealed handgun.

The changes were among dozens disclosed in legislative documents Tuesday as the Senate Finance Committee took testimony on its $71.3 billion, two-year spending blueprint. The legislation faces a June 30 deadline.

Under the Senate proposal, service members who are 18 or older would not need a license to carry a concealed handgun as long as they have military identification and a certificate indicating successful small-arms qualification.

Senators set aside $1 million each year to put in place recommendations from a task force on police and community relations. Those recommendations would include a database on the use of force and shootings involving police officers, as well as a public awareness campaign.

Emergency responders with post-traumatic stress disorder could be eligible for workers’ compensation benefits for up to one year under one Senate change. Peace officers, firefighters and emergency medical workers with PTSD arising from work could get the benefits whether they were physically injured or not. Current law doesn’t allow for compensation for a psychiatric condition unless the worker with PTSD has a related physical injury or was forced into sexual conduct.

Majority Republicans in the House removed major elements of Republican Gov. John Kasich’s tax proposal from the spending bill in April, including increases on certain business and sales taxes, cigarettes, and oil and gas drilling. The proposed increases were intended to fund an income tax reduction. Representatives want to create a commission to study such potential tax changes.

The Senate also kept in place a House provision that puts local government fund payments at risk for cities that collect fines from traffic cameras, following new state restrictions on the devices. Ohio law requires law enforcement officers be present when the cameras are used to catch speeding motorists or red-light runners, though some municipalities are challenging the law.

Other changes would:

-Eliminate a requirement that consumers complete a form agreeing to take fireworks outside Ohio within 48 hours after buying them, though people still would be banned from setting them off in the state

-Remove a proposal to extend to all individuals (instead of just students) a ban on smoking or tobacco use in any area under the control of a school district, including outdoor activities

-Prohibit a state university from requiring students to live in on-campus student housing if they reside within 40 miles of the school

-Give pay raises to all judges and sheriffs in Ohio

-Require school districts to adopt a new, tiered zero tolerance policy for violent and disruptive behavior

-Eliminate special elections in February and require those asking for special elections to pre-pay 65 percent of the cost

-Create a $1 million revolving loan program to help businesses affected when lakes are in economic distress

-Provide $12.75 million for digital electronic pollbook technology

-Designate April as “Eastern European Month”

-Restore an income tax credit for personal contributions to political campaigns

-Create an income tax refund contribution check-off to fund a program that grants wishes for children with a life-threatening medical condition

-Set aside $500,000 in the 2017 budget year to provide free admission for Ohio veterans to the Ohio Veterans Memorial and Museum

-Create a $1 million litigation fund for cases that involve a constitutional challenge to state statute and that name the General Assembly as a party.