COLUMBUS — Harold Montgomery, Gallia County president of the Board of Commissioners, stood before the Ohio Senate Finance Committee Wednesday as part of an effort to persuade legislation to make changes to Gov. John Kasich’s proposed budget which could potentially lose Gallia around $600,000 a year.
Commissioners in southeast Ohio have been concerned with the managed care tax no longer being in place. In accordance with information previously gathered by Ohio Valley Publishing, current laws say with medicaid sales tax 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” and is subject to both local and state 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.
Managed care tax went into effect in 2009 under then Gov. 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.
“For Gallia County, the current proposal regarding the elimination of the MCO Sales tax will result in a 12 percent reduction in sales tax revenue which equates to $600,000 annually,” said Montgomery. “Gallia County’s general fund depends heavily on sales tax revenue, making up 43 percent of the general fund annual revenue. As well, our reliance on sales tax revenue has increased due to the decrease of all other revenue streams such as local government funds, where Gallia County receives the minimum allowance of $715, 000 with the county general fund receiving only $315,000 or 42 percent of the total.”
Montgomery further went on to say he felt a reduction in the tax would have “severe” impacts upon first responder services like the Gallia EMS as sales tax makes up around 41 percent of the EMS annual revenue. Sales tax makes up the entirety of the county 911 communication center annual revenue. The sheriff’s office makes up around 32 percent of the county general fund. Reductions, Montgomery said, would have a major impact on the department.
Previous state revenue cuts concluded in 14 percent budget reductions across all county funded departments circa 2012. Several deputies and investigators were without jobs from this, said Montgomery. Gallia then brought those deputies and investigator positions back in 2016.
“A 12 percent reduction in sales tax will have nearly the same effect as in 2012,” Montgomery claimed.
Montgomery also said programs such as Gallia’s 4-H would suffer as it received around 70 percent of its funding from the general fund. Gallia Soil and Water office receives around 56 percent of their funding from the general fund and serves around 7,600 residents monitoring water and soil conditions. The loss of local funds would hurt the county as much of what it uses for these organizations are matching funds for grants.
“Gallia County is one of the southernmost counties in the state, being a part of Appalachia and lying along the Ohio River,” Montgomery said. “Counties from different areas of the states may have different issues plaguing their operations. However, one thing every county will have in common is the loss of sales tax revenue if the counties are not made whole. Gallia County wants to offer our support to Senator (Matt) Dolan’s amendment to address the Medicaid MCO sales tax revenue shortfall.”
Montgomery described Dolan’s amendment as being a change in formula to make up for area tax revenue shortfalls and how to decide fund distribution would be determined.
Dean Wright can be reached at 740-446-2342, ext. 2103. Sarah Hawley contributed to this story.