Over the last several years, Scioto County has been in good financial shape, due in part to better-than-expected sales tax revenue. Recently, the federal government has mandated that Ohio change its sales tax structure, as a result Scioto County could lose millions in tax revenue.
According to information from the County Commissioners Association of Ohio (CCAO), The federal Centers for Medicare and Medicaid Services have informed the state that Ohio’s sales tax law as applied to Medicaid Managed Care Organizations (Medicaid MCO’s) is out of compliance with federal regulations. In response to the federal directive, Ohio will have to craft a set of replacement taxes that 1) comply with federal regulations and 2) that replace revenues lost due to the anticipated repeal of the Medicaid MCO tax on July 1, 2017, the beginning of the Fiscal Year 2018-2019.
Scioto County Commissioner Doug Coleman said it’s not clear how the tax revenue will be replaced, but would not implemented until 2017.
“It (potential loss of sales tax revenue) would be a considerable hit to Scioto County,” said Bryan Davis, Scioto County Commissioner.
Davis said in recent conversations with State Representative Dr. Terry Johnson he expressed the importance of what could happen locally.
The 2016 Scioto County sales tax budget is $10.8 million, representing 63 percent of the total general fund budget.
“We’re looking at a 16.9 percent tax cut on Scioto County, which would be a reduction on our sales tax of $2 million dollars,” Davis said. “We don’t have firm numbers yet but, we’re looking at them.”
Davis said the commissioners plan to reach out to federal representatives about the negative impact this could have on the area and throughout Ohio.
Coleman and Davis said they’re questioning the ability of the federal government to change how state sales tax is collected.
“There are a lot of things involved here, we don’t know all of the ends and outs. But, at the end of the day this is going to kick in during the fourth quarter of 2017 so, when we do our budget at the end of this year we’re going to have to take this into account,” Davis said.”Everyone that relies on anything out of the general fund is going to have to look at this real hard and understand we could be facing a very large cut.”
According to information from the CCAO, the state must replace the Medicaid MCO sales tax that generates about $850 million per year in sales tax revenue with roughly $180 million allocated to counties.
Coleman said if a replacement revenue source is not found, it will get bad for Scioto County and nearly every other county in the state.
According to CCAO, the Kasich Administration is anticipated to offer its solution or plan to address the issue when the 2017 budget is proposed.
Davis said when this is enacted it could result in more counties being placed in fiscal emergency, because of their financial outcomes.
Coleman and Davis said they are monitoring the situation as it unfolds and will take measures to stay financially healthy as a county.
“What those measures are, time will tell,” Davis said. “Some of the things they are telling the counties to do, to find savings, Scioto County has already done. In other words, we (Scioto County) don’t have any fat on the bones (places where financial savings could be realized). We’ll see what happens.”
The CCAO has made this issue a legislative priority, urging its members to talk with legislators about the issue and what it could mean for their area.
Wayne Allen can be reached at 740-353-3101 ext. 1922 or @WayneallenPDT on Twitter.