The Union County Commissioners are expressing frustration with a plan they say will cost the county nearly half a million dollars annually.
For more than a year, Republican legislators have been trying to work between the Kasich administration and county governments to reach an agreement to replace revenue lost when the federal government said the state could no longer impose sales taxes on Medicaid managed-care organizations. The state had been taxing Medicaid plans, paid by the federal government, but not on other privately paid plans. The federal government said the state either needed to tax all the plans or none of them.
In 2016, Union County collected about $440,000 in sales tax on Medicaid payments. Statewide, counties other local entities collected about $207 million and the state of Ohio collected about $600 million in sales tax.
The state got a waiver from the federal government to create a new franchise fee on “health insuring” corporations that is to raise $615 million annually. County officials asked the state to request a different waiver on their behalf and the request was added to the state budget.
Kasich vetoed the budget provision that would have requested that waiver and if approved would have made the counties whole for at least five years.
The House voted to override the veto, but Senate would not.
Ohio Senator Dave Burke, who represents Union County, said the idea was explored, but federal officials assured the state the request would be denied. He said that adding it to the budget would have been passing the blame and giving local leaders statewide false hope.
Instead the Ohio Senate approved a one-time payment of $50 million to be made in January. Additionally, in July local governments would get the first $30 million of any surplus in the state budget.
“The solution is a solution that is, I would say, not acceptable to counties, but we were in a position where if we didn’t take it, we were probably going to get nothing.” Commissioner Steve Stolte said.
The money will be distributed based on how much a county depends on revenue from the Medicaid sales tax. Counties with large retail sales or few Medicaid recipients will get less.
“Peanuts,” is what Union County will receive commissioner Gary Lee said.
Stolte said Union County will receive, “$43,000 next year, and nothing beyond that, and that is the best we are going to do if there is a surplus.”
“I think our stance, and the stance of the state commissioners’ association is that we feel we have to accept it, but we are accepting it with the understanding that the amount is unfair,” Lee said.
Burke said he likes the local leaders and considers them friends but feels the County Commissioner Association of Ohio has given unfair, misleading and sometimes inaccurate talking points to its members.
“I don’t think our county commissioners have all the facts,” Burke said.
The senator explained that the waiver was not an option that would be accepted. He said the only other way to increase revenue for the local governments was to impose the tax on all health insurance carriers and policies.
“That is an absurd ask,” Burke said. “People are already paying too much for their health care policies. There is no way I am going to double down on that.”
Local officials said the other option would be for the state to share a portion of the revenue it receives from the franchise tax waiver it received.
“To me, that would have been the fair approach,” Stolte said.
Burke said he is on the side of the local governments and realizes there needs to be cooperation between local and state officials.
“We have to have a mature discussion and come up with solutions, but stomping your feet and saying, ‘Give me more!’ is not a thoughtful process,” Burke said.
State and local officials acknowledge the Kasich administration has not had a good relationship with local governments. Burke said the legislature will be more “intentional with the next administration” to change that.
“We always hear that we are the state’s partner and that it is the local partners who provide services,” Stolte said. “I don’t know how many times I have told Senator Burke and others that if this grand partnership were a marriage, we would have been divorced a long time ago.”
Even as state and local leaders express frustration, they can recognize that Union County is fortunate. The commissioners said the loss of revenue will likely be offset by the increased sales tax revenue brought in by the commercial development at Dublin Green. They said the loss will likely mean some future plans will be delayed or modified.
“We are fortunate,” said Lee. “Most counties are not in the same position we are in. We will be fine. We remain optimistic for the county, it has just been a daily battle to protect revenue from the state.”
Burke said residents should appreciate the position local leaders have created. He said the loss will be inconvenient for Union County, but “catastrophic” for many other counties. He said his office and the commissioners are all doing what they feel is best for the community.
“We shouldn’t take that for granted,” Burke said.