POMEROY — “Please don’t leave us behind down here.”
That was part of the message conveyed by local resident Brian Condee to state legislators during Monday’s town hall meeting hosted by the Meigs County Commissioners.
The meeting brought together local residents, officials from Meigs, Gallia and other surrounding counties, as well as state representatives, and representatives from the governor’s office, Senator Rob Portman’s office and Congressman Bill Johnson’s office, to discuss the impact of the proposed state budget on local governments.
The main topic of concern discussed during the two hour meeting was the cuts coming to local governments as a result of the managed care tax no longer being in place.
As previously reported, current law regarding medicaid sales tax provides that “all transactions by which health care services are paid for, reimbursed, provided, delivered, arranged for, or otherwise made available by a Medicaid health insuring corporation pursuant to the corporation’s contract with the state” is subject to both state and local sales and use taxes collected by the Department of Taxation.
For purposes of collecting the tax, the Medicaid Managed Care Organization (MCO) is considered the consumer of the service. The state and local sales taxes are collected by the state and the local portion is remitted to the county or transit authority. For purposes of applying local sales taxes, the state credits the local sales tax to the county of residence of the MCO enrollee.
This is set to change this summer as a result of federal regulations.
State Rep. Ryan Smith (R-Bidwell), who represents the 93rd District, explained that the managed care tax went into effect in 2009 under then Governor Ted Strickland, with medicaid expansion later increasing the financial benefit over recent years from the tax. Now, the federal government says that the services can no longer be taxed, resulting in an approximate loss of $900 million to the state and more than $200 million to local governments.
Right now, the focus is on how to offset the loss and/or lessen the blow.
While Vinton and Meigs Counties are the two set to see the largest impact from the cuts, Ryan Smith said that Cuyahoga County and others are screaming as well about the impact of the cut.
Smith said that in order to approve a budget (or any other bill) there must be 50 votes in the house. That being said, a proposed fix must not only benefit the Appalachian counties, but other regions as well.
The cut to Meigs County would be 21.7 percent of the county’s annual sales tax revenue, or $574,302 annually.
Condee asked the commissioners to explain what that amount of a decrease would mean to the county budget and the residents of the county.
Commissioner Randy Smith explained that for 2017, the county has a budget of $5.4 million so this cut would be around 10 percent of the budget and would likely mean cuts to services and staff. Smith said that that percentage of a cut would be huge no matter the level of government.
For Gallia County, it would be a 12 percent loss to sales tax revenue, which equals $592,650 annually.
The state of Ohio would also loose the sales tax revenue, but the proposed budget “makes the state whole” by creating a fee, which has been approved by the federal government.
Some of the solutions asked about during the meeting were if the fee could be expanded to cover the loss to the local governments; can lottery funds be used for other purposes; broadening the tax base to tax other services as has been done in California and other states; and a potential sales tax increase.
Ryan Smith said at this point everything is on the table.
Smith and State Rep. Jay Edwards explained that the tax in Ohio is unique when compared to the other states as Ohio’s tax includes the “piggy-back tax” which gives state the tax as well as the local governments.
President of the Meigs County Trustees Association Bill Spaun asked what was the best thing for local officials and individuals to do to make their voices heard, expressing that the county, townships and villages can not loose the funding.
Randy Smith said that attending the meeting on Monday was the first step in the process.
Ryan Smith said that advocacy was something that everyone can do. Reach out to legislators, the governors office and others.
Ryan Smith acknowledged that when speaking with him or Edwards it may be “preaching to the choir” as they are from the area and live it.
Gallia County Commissioner Harold Montgomery said that a few years ago the county suffered immensely with over $800,000 in budget cuts, but got through it. As the state has filled the rainy day fund, the thought was that the money would come back to the counties and the local government fund.
Montgomery said that he would like to think that the local governments are partners with the state and would like to think that when looking at the rainy day fund they would remember the counties.
Racine Mayor Scott Hill, Amesville Mayor Gary Goosman and Jacksonville Mayor Tony McNickle each expressed their concerns with cuts to the local government fund and the impact it has had on small villages.
Goosman said that he is not sure how much leaner the village can get.
Goosman added that it seemed like a bad time to roll back the income tax, while raising the sales tax as had been considered. He said that the people in Amesville would mostly not receive a benefit from the income tax reduction, but would be impacted by any sales tax increase.
As the state’s local government fund is based on sales tax figures it would also stand to loose money based on the cuts, although specifics of those figures were not discussed at the meeting. The potential cuts to local governments in this area may be covered under a “hold harmless” rule which means that those receiving less than a certain amount could not loose additional funding. Brad Cole from the County Commissioners Association of Ohio said that to the best of his knowledge that provision would remain in place.
McNickle stated that the villages need help like everyone else and encouraged people to call the governor’s office. He said there is a concern of where villages such as Jacksonville will be in two to three years, stating that it will be a ghost town. “We need help from Ohio,” said McNickle.
Hill said that in Racine the general fund goes just to operate the village and its police department which is working to fight the drug epidemic in the village. Hill expressed that the village cannot afford to get grants as they no longer have money for the required matches, and that when they have applied for capitol funding it has not been awarded.
Hill expressed his frustration that the project they applied for — playground equipment to replace old equipment which does not meet code — was not funded, but that the Columbus Crew received funding for a practice field. Hill’s statements drew applause by some in the audience.
When the suggestion was made at a meeting a few years ago to Hill and others that they use the new idea of sharing services, Hill said it was something that had been done in this area for many years.
Ryan Smith explained that at this point the budget has been proposed by the governor’s office and is currently with the house finance committee, which Smith chairs. The finance committee and then its sub-committees will hold hearings on the budget before putting together a budget which the house must approve to be sent to the senate for the same consideration. A balanced budget must be approved by June 30.
Smith explained that there are a lot of issues in the Appalachian region that are the same no matter the county. Those common themes include safe communities, good schools and good roads to drive on.
An additional focus is also on the opioid epidemic which results in jail overcrowding and a significant number of individuals in prisons.
Sheriff Keith Wood and Meigs County Department of Job and Family Services Director Chris Shank both discussed the impact of the drug epidemic.
Wood said that housing has been a big problem and that the task force has helped with the drug problem in the region. Budget cuts would likely impact the task force and its abilities, said the sheriff.
Shank noted that in each of the past two years Meigs County has spend more than $300,000 on foster care, with a large portion of that in relation to drug cases. Shank said that the agency is not funded by a levy, and encouraged Smith and Edwards to look at child welfare funding.
Meigs County Engineer Gene Triplett also asked about the possibility of an increase to the state’s gas tax, which he said had not been increased since 2005. The county highway department operates off the gas tax and licenses fees. Triplett suggested a 10 cent increase to the gas tax may even go unnoticed by some as the gas prices fluctuate so frequently.
Ryan Smith stated that it is hard to get some legislators to support any tax increase, although he did not disagree with the need to increase the gas tax.
State Rep. Jay Edwards (R-Nelsonville), who represents the 94th District, said that he is learning as he goes, only being in office for a few weeks. He said that he has been making a lot of phone calls to Smith to discuss the budget.
Edwards acknowledges Kathleen Young and Steve Caroway from Gov. John Kasich’s office who were in attendance, stating that they needed a lot of credit for attending the meeting and taking the words expressed back to the governor.
Individuals and local officials were encouraged to reach out to legislators, the governor’s office and others at the state level with any suggestions they may have.