DALLAS -- Ohio will take competitive bids on $350 million of general obligation bonds Thursday in a deal to fund schools.

The bonds are being offered in two new-money series.

The first series offers $300 million with proceeds providing money to pay for school facilities throughout the state.

The A series for $50 million will provide funds to pay conservation-related purposes.

PFM Financial Advisors LLC is the financial advisor. Squire Patton Boggs LLP is issuer and disclosure counsel and Calfee, Halter & Griswold, LLP is bond counsel.

The bonds are rated AA-plus with a stable outlook by Fitch Ratings and S&P Global Ratings. Moody's Investors Service rates the bonds Aa1 with a stable outlook.

John Charlton, communications director for the state budget office, said the state isn't planning any special outreach for the bonds. However Charlton said that Ohio, a frequent issuer, "typically draws good interest in its competitive bids."

The sale comes as the state is preparing to roll out its new two-year budget at the end of January. It's expected to be a tough one as revenues continue to lag estimates. November state tax receipts show that tax revenue came in $99 million below projected estimates and October receipts came in $88 million lower than projections.

Ohio Gov. John Kasich made headlines in early December when he warned the Ohio General Assembly that the state was on the verge of a recession.

"The Kasich Administration fiscal policy has always been based on conservative budgeting strategies, such as not spending all the revenues available and ensuring that the state has appropriately budgeted to cover all expected expenses," said Charlton. "Thanks to continued underspending by state agencies, Ohio should be able to weather the present economic uncertainty."

Kasich is expected to introduce a budget based on restrained revenue growth and conservative budgeting principles with the goal of helping the state weather any negative trends in tax revenues.

"This will likely mean holding the line on spending on priority areas where the administration previously had targeted resources when revenue projections were higher," said Charlton.

Moody's noted in a December report that the state needs to address sales tax revenue loss from services provided by Medicaid-oriented managed care organizations. The revenue loss, which is due to new Centers for Medicare & Medicaid Services guidelines, will begin in the fourth quarter of 2017 absent state action.

"We expect the state will address the loss of sales tax revenues in its fiscal 2018 budget, starting July 1, 2017, but it is uncertain if counties will be held harmless," said the rating agency.

Many Ohio counties stand to lose 3% or more of their operating revenue from the disappearing Medicaid tax. Transit authorities also stand to lose a sizeable share of their sales tax revenues from loss of the Medicaid tax. Moody's said that the Greater Cleveland Regional Transit would be one of the hardest hit from as the sales taxes collected from the expiring tax accounts for approximately 8.2% of its total sales tax receipts.

Ohio counties have no legal limitations on its ability to raise revenues through base broadening, rate increases, or the assessment of new taxes or fees. County boards can approve a sales tax up to 1.5% without voter approval. As such, the state could opt to broaden the sales tax base to cover all health care services and providers, said Moody's. The legislature has until June 30, 2017 to take action.

The state has $493 million in outstanding general obligation and lease revenue variable-rate debt.

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