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MCO tax’s uncertain future looms over budget meeting
By Justin Wier
YOUNGSTOWN
The uncertainty surrounding a revenue source that brought Mahoning County between $4 million and $5 million annually loomed large at a Wednesday meeting of the county’s budget commission.
County and transit systems relied heavily on a 5.5 percent sales tax on Medicaid managed-care organizations. The tax represented $209 million, or 8.2 percent of all county and transit authority sales-tax revenues, according to the County Commissioners Association of Ohio.
But the federal Centers for Medicare and Medicaid Services told the state that applying the tax to Medicaid MCOs but not other health maintenance organizations violates federal law.
The state had to expand the tax or eliminate it. Ohio stopped collecting the tax effective July 1.
The state will continue to receive revenue through a franchise fee on all MCOs, but county revenues are less certain.
State lawmakers provided transition aid that will help counties through the end of fiscal year 2018 – Mahoning County will receive about $5.2 million for the fourth quarter of 2017 and 2018 – but nothing concrete exists beyond that.
County Prosecutor Paul Gains, who chairs the budget commission, said the loss of the MCO tax is another blow dealt to local governments by Gov. John Kasich.
“The governor touts what he’s done for the state, but doesn’t tell the public about the stress he’s put on local communities,” Gains said.
The state instructed counties to put the transition aid in a separate fund from which the county commissioners can allocate the money as needed. The state has yet to issue further guidelines, county officials said.
The county will try to avoid using the transition fund until the long-term status is clear, the commissioners’ Executive Director Audrey Tillis said.
Members of the County Commissioners Association of Ohio met with representatives of the Kasich administration and state senators on Wednesday in hopes of finding a long-term solution. The Senate will bring up the issue on Sept. 6.
In the meantime, $600,000 this year and $1.75 million next year will supplement the county’s justice fund, and $400,000 next year will supplement the general fund.
That leaves the county with about $2.45 in the transition fund in case nothing further comes from the state.
The reduction in state funding to local governments has resulted in increased levies and sales tax at the local level, Gains said.
“People in this area have to pick up the additional burden so our governor can have a big reserve in Columbus,” he added. “And I don’t know what he does with it.”