County offices in danger

MCO tax elimination eliminates community programs

By Nikki Blankenship -

As the county faces an estimated $2.1 million cuts as a result of the a planned tax cut coming down from the state, several programs may be in danger. The decision from the state is expected by Friday.

Local governments across the state are expecting hard budget hits with the Senate planned Medicaid managed Care Organizations (MCO) sales tax elimination.

The current MCO, that went into affect Oct. 1, 2009, states “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 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. Overly simplified, the MCO tax is a sales tax on Medicaid transactions. Though a flawed program, the Senate plan to eliminate the tax without a replacement has Scioto County Commissioners frantically fighting for a solution.

“We are coming down to crunch time on the MCO tax thing,” Commissioner Bryan Davis commented during Tuesday’s Commissioners meeting. ”There is a lot of things going on. They (Senate) are suppose to — out of conference committee today — get a final draft of the bill. I don’t think it will happen til tomorrow, but it could happen as early as today.”

Davis continued by explaining that the Senate has already passed their version of the bill without a fix for the MCO tax in the county.

“The House, of course, had already done that,” he added. “It is now in the hands of conference committee.”

The committee is currently looking for a solution “through the act of reconciliation and insert an amendment that will hopefully plug this funding hold for the counties.”

Davis has been following efforts of other local governments and is only seeing that many are as concerned as leaders in Scioto County.

“I will tell you what I’ve read from all across the state,” Davis commented. “I can see those (newspaper articles from across Ohio) have very similar coverage (as locally). A lot of the counties are dealing with this and even the articles I read, the funding losses — mostly in rural counties is where I’m looking – they’re losing less than us, and they’re frantic as far as what they are going to do.”

If a solution is not found, Commissioners worry that the budget is going to go into the red.

“The County’s facing fiscal emergency, and this will hurt us terribly,” Davis stated. “I will reiterate we will stay healthy. We will find a way.”

Commissioner Mike Crabtree gave further insight into how the County will deal with the cuts should they come.

“We really don’t have a choice,” he began. “That’s the sad part, is that a lot of people who are funded through county governments statewide, a lot of them are not mandated expenditures. They’re just basically free gratis from the county budget, like Soil and Water, 4-H and a lot of those programs that are very important to people within the county. Those are probably, most likely the most vulnerable.”

It is departments such as the Soil and Water Conservation District and 4-H that most community members work with in the public. They offer a variety of educational and outreach programs that will likely face elimination. Other departments, including treasurer, auditor and a variety of others (nearly a dozen in total) are mandated or departments the County is required to operate.

“So, if something is not done what we have to do is we are going to have to make some tough decisions as far as what do we fund,” Crabtree stated. “Obviously, we have to fund certain things. We have no choice. And, if there’s no money left, that’s where you stop.”

Davis added that cutting non-mandated departments still doesn’t offer much of a solution.

“We’ve already talk to the Auditor and the Treasurer, and we will enter into meeting immediately on what it means and what we need to do (if the bill is passed as is),” Davis explained. “We already have an estimate from the Auditor on what next year will look like. We just had this discussion yesterday (Monday) about where the target areas would be and what that would look like. Even if we cut out all the entities that are not mandated, it does not come close to $2.1 million.”

Davis added that the County made $414,000 in cuts for the first quarter of this year, already budgeted knowing this was coming, but that is barely making a dent in the problem.

Davis added that the Commissioners have considered cuts to those offices that are the greatest burden on the budget; however, those offices are the overcrowded jail, probation department and courts.

“Those are areas where you have a delicate balance,” Davis commented. “You want to empower your people to fight crime and do what is necessary to keep the people safe. At the same time you have other offices you also have to keep open.”

Increases in sales tax collected will help to offset some of the loss, but again is no where near enough.

“The goal would be to totally replace the MCO tax overtime so we’re not dependent upon on it. It would take Scioto County the fourth longest time frame to replace this MCO tax, and a big portion of that is increased sales tax revenue,” Davis explained. “That’s a big if. Right now, we’re bucking the trim. Scioto County’s doing good. We’re growing as far as sale tax revenue.

Replacing $2.1 million is one year is impossible. We would have to have a massive increase in economic activity and people buying things in this county in order to offset that. It would have to be massive, four times what we have now.”

Crabtree took a strong stance against the State, frustrated with the situations their decisions create.

“So the problem with the government right now is that local government doesn’t have that much control over revenue,” he said. “The State, through their actions over the years, they have done a lot of things that have seriously affected our revenue stream, and they continue to do that. Then they try to let on like there is no cure, and they’re not the reasoning behind it and they haven’t created the problem when in fact many times they have actually created the problem themselves. I hope they do the right thing. I know Bryan feels the same way I do. We hope that they use their common sense and do exactly what they are supposed to be doing up there, what they’ve been elected to do and hope this doesn’t go where we think its heading.”

Both Davis and Crabtree urged the community to also fight for a resolution by contacting State leaders.

“What I have is a list of our representatives, as well as the finance chair, the president pro tem, the Senate majority whip and majority leader of the House and Senate,” Davis said. “They (community residents and business owners) need to call and make it known to their representatives that we need them to take this very seriously. I believe some are, some are not. And they need to work hard to get this resolved by Friday. These are the people that can push the buttons to make things happen, and I believe it’s important that we let them know our displeasure. And again, we encourage those entities that receive funding, that is not mandated funding from the general fund, that they seriously take under consideration phone calls to these representatives to let them know about their desire to see this funding hole plugged. We’ll leave it at that. We’re doing our part, we’re still working hard, making a lot phone calls talking to representatives, talking to Senators, making sure the fellow commissioners in the other counties are. I assure you they are. We will continue to work on this until Friday, which is the deadline. Friday would be their last day, unless they go into the weekend, I mean they could, but we’ll see.”

MCO tax elimination eliminates community programs

By Nikki Blankenship

Reach Nikki Blankenship at 740-353-3101 ext. 1931.

Reach Nikki Blankenship at 740-353-3101 ext. 1931.