INDIANAPOLIS — Indiana taxpayers came out ahead in the special legislative session because it resulted in a two-year budget that increases overall funding for public schools while preserving much of the state’s reserves, Republican Gov. Mitch Daniels said Wednesday.

Daniels said the $27.8 billion budget passed by the General Assembly on Tuesday spends a little more than he would have liked. But he said enough lawmakers made tough choices and compromised on a responsible bill that he quickly signed into law.

“It was a good process of give-and-take,” he said. “There are things in there for everybody to feel pleased about and everybody to disagree with.”

House Speaker Patrick Bauer, D-South Bend, has been in the House since 1970 and has helped draft several state budgets during hard economic times. He said this recession and other factors — including a plan to help an Indianapolis sports agency — made negotiations on this spending plan the hardest he has gone through.

The Democrat-led House and Republican-ruled Senate passed the budget just hours before midnight Tuesday, when the previous two-year spending plan expired. Failing to meet the deadline would have meant a large-scale shutdown of state government.

Lawmakers did not pass a budget before the regular session deadline of April 29, forcing the special session that began June 11.

The two-year budget will increase overall state spending on public schools by an average of 1.1 percent in the first year and 0.3 percent in the second year. But many school districts with declining enrollments will get less money than they got this year, while some suburban districts with growing enrollments will get large increases.

Many Democrats called that an outrage, and Rep. Vernon Smith, D-Gary, referred to it as a case of “reverse Robin Hood.” Some also blasted provisions to help a financially strapped sports agency in Indianapolis, saying it was another case of the Legislature helping the state’s capital city while ignoring problems in other areas of the state.

Bauer said Wednesday that he shared in their frustration, but noted that House Democrats had at least secured more funding for schools and higher education than previously proposed by Republicans.

He said a previous budget proposal by Senate Republicans would have led to an estimated 4,000 teacher layoffs, a number he hoped would now be cut in half. He also said Democrats were able to get $650 million in bonding authority for university building projects that would create jobs quickly.

“So we prevented job losses and we helped create more jobs,” Bauer said. “There’s no question we wanted it to be better, but that battle will have to come later this year.”

Bauer was referring to the next legislative session, which technically begins with an organization day in mid-November.

The Legislative Service Agency, the General Assembly’s nonpartisan research arm, did not have a figure on how much the special session cost taxpayers. Daniels said he guessed the final tab would be about $150,000. He said it was worth it because spending in the budget was more in line with revenue projections.

He said the budget spends about $700 million less than a bill that did not pass both chambers on the final day of the regular session, and about $1 billion less than a bill House Democrats passed earlier in the special session.

“In addition to striking a great bargain that protects taxpayers in this state, almost uniquely in America, we’ve done a good thing for our kids, their future and our state’s future,” Daniels said. “And we still have a billion dollars in reserve when there are tax increases happening all over the country.”

He predicted that drafting the next biennial budget in 2011 would be another challenge.

“We’ll be dealing with fewer dollars in two years than we did two years ago,” he said.