GALLIA COUNTY — With concerns regarding Gov. John Kasich’s proposed budget and potential losses in funding, Gallia County Commissioners are continuing to reach out to state legislators after meetings in Pomeroy and the most recent in Chillicothe Monday, to discuss concerns with fellow county commissioners and legislators.
The commissioners, along with their Meigs County counterparts, passed a resolution last week asking lawmakers to push against a funding loss of a Medicaid Managed Care Organization sales tax revenue.
According to Gallia Board of Commissioners President Harold Montgomery, the county stands to lose around $600,000 a year (around 12 percent loss in sales tax revenue).
“I was in Chillicothe in a meeting today and this was the topic of discussion there,” said Montgomery. “We’re trying to lobby our state legislators. This is the proposed budget from the governor. It’s going to take around three months before it really gets worked out. We’re going to go between now and July 1 before the budget has to be in place. All of the counties, are up in arms about the loss of these funds. State Representative Ryan Smith and Senator Bob Peterson, they both are working diligently to resolve this.”
As previously reported by Ohio Valley Publishing, 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.
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.
“Ohio is looking at going with a fee structure instead of a tax,” said Montgomery. “They want to charge a fee instead of a tax and doing that leaves the local governments out because when Ohio was charging a sales tax, we piggyback on that locally. We have a one and a quarter percent sales tax that’s added to the state sales tax.”
A quarter percent sales tax is administered to the Gallia 911 Center as well as another quarter percent for the Gallia EMS, according to Montgomery. Another half percent is considered permissive sales tax.
“It’s a big part of our county’s general budget,” said Montgomery. “We receive about $3.5 million of sales tax out of that one and a quarter percent. The state is going to change the method in which they tax and put a fee (out). The governor’s proposal is set up on a formula and with Gallia County we would receive a one-time payment of $900,000 and that would be the end of it. “
Dean Wright can be reached at 740-446-2342, ext. 2103. Sarah Hawley contributed to this report.