County prepares for loss of state funds

CELINA - The elimination of a state sales tax will leave county commissioners with less money in future budgets.

The state legislature is providing a one-time payment to help bridge the gap while local officials find ways to make up the difference after the elimination of a sales tax on health-care services purchased through Medicaid managed care organizations.

Centers for Medicare and Medicaid Services, according to commissioners' resolution, "advised Ohio that taxing a subset of health care providers for the same rate as a statewide sales tax is not permissible and that a new method be implemented by July 1, 2017."

Mercer County commissioners on Tuesday approved creating a county Medicaid sales tax transition account to receive state transitional aid of $70,711. The money will come in two equal payments by February.

"That gives the counties that are really going to be put in a bind at least a year in order to come up with something to replace that funding," commissioner Jerry Laffin said.

The transitional aid, the second-lowest amount awarded to 96 state jurisdictions receiving funding, pales in comparison to the roughly $275,000 Mercer County had been receiving each year from the sales tax.

The amount, according to the County Commissioners Association of Ohio, is based on county per sales tax base as a percentage of statewide per capita sales tax base, average Medicaid MCO sales tax distribution and average jurisdiction sales tax distributions from 2015 to 2016.

"We're just going to have to tighten the budget," Laffin said.

His colleagues agreed.

In 2019 and beyond, "we're going to have to get used to having roughly $275,000 less a year in local general funds, so that's going to hurt allocations that we can make," commissioner Greg Homan said.

"It's a direct impact on our budget," commissioner Rick Muhlenkamp added

Laffin, Muhlenkamp and Homan, though, did not specify potential cuts in the 2018 budget, which they will begin to craft in the coming weeks. This year's general fund, which pays for the day-to-day operations of the county, is set at $12.1 million, up from $11.69 million in 2016. Total appropriations for all accounts is $60.72 million, compared with $59.9 million last year.

"We're not talking about going on the ballot for a levy in order to recoup it. We're just going to ride the storm," Laffin said. "We don't know for sure how it's going to end up this year but other years we've been fortunate that our sales tax has always been up a certain amount."

Auglaize County, according to the Ohio Department of Taxation, will get transitional aid of $164,879.

Commissioners said state legislators haven't come up with an alternate source to replace the lost revenue but are providing the one-time transitional aide - a total of $207 million to 96 jurisdictions, according to CCAO - to help local officials adjust.

Mercer County Auditor Randy Grapner late last year had said the local tax on medicaid-managed care services represented about 3.6 percent of the county's total annual sales tax revenue, which was a record-shattering $8.14 million in 2016.

Mercer County's sales tax rate is 1.5 percent; 1 percent goes directly into the general fund while 0.5 percent is used each year to pay down the debt and maintain the adult detention center/sheriff's office, west of Celina. The combined state and county sales tax rate is 7.25 percent.

Still, other counties are facing much greater losses due to the elimination of the Medicaid-managed care services tax, commissioners pointed out.  

"There were some counties in southeast Ohio that this was roughly about 20 percent of their sales tax dollars, so a really huge impact in those counties," Muhlenkamp said.