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Big sales-tax revenue loss projected
YOUNGSTOWN
Ohio’s counties and transit authorities face big losses of sales-tax revenue due to a federally imposed ban on sales-tax collections tied to Medicaid managed care.
The U.S. Centers for Medicare and Medicaid Services has ruled that, beginning in July 2017, sales tax can no longer be targeted toward insurance companies under contract with the state to cover Medicaid.
Medicaid is a jointly funded, federal-state health insurance program for low-income and needy people.
The federal agency, which is part of the U.S. Department of Health and Human Services, said this tax on these Medicaid health-insuring corporations is an impermissible health care-related tax.
Mahoning County will lose $3.7 million annually for a 9.5 percent loss in its sales-tax revenue; Trumbull County, $2.7 million for a 10.6 percent loss; Columbiana County, $2.1 million for a 12.7 percent loss; and the Western Reserve Transit Authority, $823,578 for a 9.6 percent loss, according to the Ohio Department of Taxation.
Total sales-tax revenues distributed to those entities for 2015 were $38.8 million for Mahoning County; $25.9 million for Trumbull; $16.8 million for Columbiana; and $8.6 million for WRTA.
Statewide, the loss is projected to be $148 million in revenue to the 88 Ohio counties, which collectively received $2 billion in sales-tax revenues last year.
For eight transit authorities, including the Youngstown-based WRTA, the loss is projected at $33.6 million. The authorities collectively received $451.7 million in sales-tax revenue last year.
“It’s a big number for all the counties,” said Ralph Meacham, Mahoning County auditor.
“This seems to be kind of a fluid situation. ... Counties are pushing back, looking for some relief” by lobbying legislators, he added.
“I’m not sure of the probability of success [in the lobbying effort], so we have to plan for the worst, which we will take on when we start the budgetary process for next year” this fall, Meacham said.
In a statement on behalf of the Mahoning County commissioners, their executive director, Audrey Tillis, said commissioners are aware of the issue and plan to meet with state legislators to discuss the potential impact to the county.
Carol Rimedio-Righetti, chairwoman of the commissioners, will ask the County Commissioners’ Association of Ohio to put this issue on its 2017 platform when she attends the association’s meeting next month, Tillis said.
Based on discussions with the association, Tillis said county officials don’t expect state officials to address this issue until they prepare early in 2017 for their next budget cycle.
“We’re not sure what’s going to happen yet,” said Columbiana County Auditor Nancy Milliken.
“The county commissioners are advising all departments in the general fund of cuts that are coming” because of the projected sales-tax loss, she said.
The Columbiana County Budget Commission has projected a net loss of $800,000 in the second half of 2017 based on the county’s being able to compensate in part for the expected sales-tax loss using other revenue sources, such as investment income, other state funding and some fines and fees, Milliken said.
That commission has projected that county’s general-fund revenue at $18.7 million for 2017.
Milliken projects a $3 million carryover from 2016 to next year, but she urged the commissioners not to appropriate that money until it’s absolutely necessary.
“We’re hoping that our carryover will help us through the year” 2017, she said.
“The state of Ohio, out of [its] rainy-day fund, should reimburse the counties for that lost sales tax,” said Adrian Biviano, Trumbull County auditor.
State officials were advised of the health care sales-tax issue two years ago in a letter from multiple officials of the U.S. Centers for Medicare and Medicaid Services.
Applying state taxes to Medicaid managed-care organizations, but not to all managed-care organizations, is impermissible, the federal officials said in a July 25, 2014, letter to state health and Medicaid officials.
CMS told Ohio to comply with that standard before the new state budget cycle begins in July 2017, or abolish the sales tax on Medicaid managed care.