COLUMBUS — Shelby County Commissioner Julie Ehemann told county leaders from throughout the state here, Wednesday, April 26, that counties face having to cut essential services if the federally mandated elimination of a particular state sales tax is not addressed.
Ehemann was one of four county officials who spoke during a press conference organized by the Ohio Council of County Officials (OCCO) to urge the legislature to carefully address how they will handle the loss of the Medicare managed care organization sales tax.
“Since 2009, Ohio has levied state and local sales taxes on Medicaid health benefits provided by managed care organizations (MCOs). The federal government has indicated that Ohio’s tax is out of compliance because it does not apply broadly to all MCO services. The tax must be eliminated or brought into compliance by June 30,” OCCO said in a release.
“In 2016 the Medicaid MCO sales tax generated $209 million or 8.2 percent of all county and transit authority sales tax collections. Additionally, the tax was projected to contribute $578 million to the state’s general revenue fund in SFY 2019.
“Clearly, this issue will be a challenge for both the state and local governments. For counties, this anticipated revenue loss is one in a series of negative revenue impacts that have created instability for county government over the last decade,” the release states.
Ehemann joined Athens County Auditor Jill Thompson, Montgomery County Coroner Dr. Kent Harshbarger and Morrow County Commissioner Tom Whiston on the podium during Wednesday’s event at the Ohio Statehouse.
“Our 88 counties serve in a partnership with the state, providing necessary services such as public safety, elections and child protection to our citizens. We pride ourselves on doing this at a reasonable cost, but if the governor’s proposal becomes reality, some of the services counties provide could be threatened,” Ehemann said. “Despite being seven years into an economic recovery, many counties, including my own, are still working to regain our financial footing after the great recession. In fact, Shelby County’s 2017 general fund budget is currently $176,000 less than the budget passed in 2002.”
She noted that some of the austerity measures enacted in 2008 are still in place in Shelby County. The 2008 measures included hiring freezes, voluntary cuts in pay to employees and elected officials, reduced hours of service to the community and elimination of financial support to numerous entities that were not state-mandated.
“Improvements to infrastructure were nonexistent as we Band-Aided buildings while we weathered the storm,” Ehemann said. “As we face new pressures caused by the opiate epidemic, bearing an additional loss of revenue from the elimination of this sales tax will leave many counties unable to fund vital programs.” The amount Shelby County will lose is $455,000.
Harshbarger said that the opioid epidemic is stressing coroners’ offices statewide and tax cuts will negatively impact the number of autopsies they will be able to handle.
Whiston noted that there is unity among all the elected county officials. Eighty-six counties have passed resolutions or written letters to the state legislature about this issue, he said.
The OCCO is calling for the state to partner with counties to develop ways to address the tax law change.
“The change is mandated by the federal government but the state is not doing it properly,” Ehemann told the Sidney Daily News. “While we’re getting support from the state legislature, they don’t have a solution yet.”
The current proposal included in the SFY 18/19 executive budget fully replaces lost revenue to the state, but provides counties and transit authorities a one-time allocation ranging from three months’ to several years’ worth of revenue.
The OCCO wants a solution that doesn’t harm counties.
“Sales tax is currently the number one revenue source for both counties and the state,” the OCCO release stated. “As we look to a future without the Medicaid MCO sales tax, any plan moving forward must protect counties from further losses to their general revenue fund. OCCO supports solutions that are permanent, hold all counties harmless and do not impact funding of other local government programs or increase mandates on counties.”
Reach the writer at 937-538-4824.