INDIANAPOLIS | Indiana lawmakers departed the Capitol early Tuesday evening relieved they averted a state government shutdown with hours to spare, but few were happy with the two-year, $28.5 billion budget that Gov. Mitch Daniels promptly signed into law.

"If we don't vote to pass this budget, we are going to shut down this state, put people out of work," Sen. Luke Kenley, a top Republican negotiator, said after enduring two hours of complaints. "I'm going to ask you to vote 'yes' even though you hate this budget."

The spending plan, which also dangles a coveted bus and rail authority for Northwest Indiana, then cleared the GOP-ruled Senate on a 34-16 vote, with Sens. Frank Mrvan, D-Hammond, and Jim Arnold, D-LaPorte, providing half of the four Democratic votes.

Earlier, Rep. Mara Candelaria Reardon, D-Munster, was the lone region Democrat in the House -- among 14 statewide -- to back the budget as it cleared the Democratic-led chamber by a 62-37 margin. She and Mrvan pointed to the $14 million included to complete Little Calumet River levees, which is expected to be enough to finish the 28-year-old flood control project.

"How could I not support that?" Candelaria Reardon said of the levee funding. "My schools overall take some hits, but it could've been worse."

Statewide, schools are set to receive average funding increases of 1 percent next year and 0.3 percent in 2011. But the School City of East Chicago stands to lose about $3 million in state funding by June 2011 because of declining enrollment, while Gary schools face a $13 million loss over the biennium.

"Every time we deal with a budget, I'm up here with the same sad song about what we're doing to urban schools and most specifically Gary Community School Corp.," Rep. Vernon Smith, D-Gary, told colleagues during an 18-minute speech. "Most of you don't even care what you're doing to Gary, Indiana."

Rep. Charlie Brown, D-Gary, also opposed the budget but initially was listed as not voting, a problem he blamed on a malfunctioning voting button. "It wouldn't let me vote 'hell no,'" he said.

Sen. Earline Rogers, D-Gary, complained Republicans would not consider a land-based casino for her hometown, forcing her to settle for a summer study on gaming issues. Rogers said she considered printing T-shirts that read: "My legislator went to Indianapolis, and all she got back was a lousy study committee."

There was an anti-Indianapolis fervor amid the hours of floor debate, as lawmakers vilified the $8 million a year in state tax revenue the budget bill allows the capital city to siphon toward its deficit-ridden convention and stadiums authority.

Among the prizes secured for Northwest Indiana is a local income tax-backed transit district for Lake, Porter, LaPorte and St. Joseph counties that won't become a reality unless voters in at least two of those counties sign off on referenda scheduled for Nov. 3.

Kenley, R-Noblesville, said the referendum requirement represents a challenge to region politicians to prove public support for the transit authority. The district, to be overseen by region mayors and county officials, could impose a proportional income tax of up to 0.25 percent in each member county to create a regional bus system for Lake and Porter counties, fund South Shore operations and finance rail extensions to Lowell and Valparaiso.

Region lawmakers, particularly Reps. Chet Dobis, D-Merrillville, and Ed Soliday, R-Valparaiso, griped that the referendum requirement was added at the last minute without their consent.

Sen. Karen Tallian, D-Odgen Dunes, agreed the referenda will force four county election boards to spend "a pile of cash" on what could be a fool's errand. She also assailed another budget clause allowing the Porter County Council's decision to withdraw from the Northwest Indiana Regional Development Authority to be overridden by any two Porter County municipalities that wish to remain in the RDA -- at cost of $3.5 million a year to the county.