Clark County may receive up to $6M in temporary sales tax cut relief

Clark County may receive up to $6 million from the state over the next two years to soften the blow of the elimination of sales taxes from Medicaid-funded organizations earlier this year by the federal government.

However Clark County commissioners still may cut up to 7 percent of its $178 million annual budget to make up for the loss of the sales tax that will occur once the temporary additional funding runs out in 2019.

FIRST REPORT: Federal change will cost Clark County $3 million in sales tax

It’s unclear how the county will move forward but cuts are expected to be made, County Administrator Jenny Hutchinson said. She’s yet to talk with commissioners about it, she said.

“There’s several scenarios we could look at,” Hutchinson said. “Those are discussions we need to have with the commission.”

Clark County budget meetings are expected to be held in November. The budget is expected to be finalized by the end of January, she said.

The goal is to cut from operations rather than personnel, Hutchinson said.

“We can really only tell what the commissioners’ office is going to do,” Hutchinson said. “I don’t think the goal is to layoff anybody. We’ll work through it.”

MORE: Clark County’s $178M budget includes raises, repair projects

The federal government ended the state’s collection of sale taxes on services from Medicaid managed-care organizations — such as Dayton-based CareSource — as of June 30.

Clark County collected about $3 million in Medicaid Health Insuring Corp. sales taxes annually, according to state data.

The federal changes will ultimately cause Clark County to lose $3 million — more than 12 percent of its $23.5 million in annual sales tax revenue — in sales taxes annually.

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“There were other counties who lost a lot more than that,” Clark County Commissioner Rick Lohnes said.

Clark County commissioners approved the creation of a special fund to accept the temporary money from the state legislature earlier this week.

Last month a $207 million transitional aid package for counties and transit authorities affected by the Medicaid sales tax changes was proposed by the Ohio Senate to counties and Gov. John Kasich’s office.

The details still are being worked out but the framework of the plan has been agreed to, Lohnes said. The additional funding gives counties time to generate a plan to deal with the cuts, he said.

“It helps reduce the pain a little bit,” Clark County Commissioner Melanie Flax Wilt said.

The county will receive money in both November and January, Lohnes said. It will be placed in a specific revenue fund and has no restrictions, he said.

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Another payment could come in November of 2018 if sales tax revenues perform well, he said.

“In essence, it goes away in (2019),” Lohnes said.

The Medicaid tax began in 2005 and was expanded in both 2009 and 2013. But in 2014, the federal Centers for Medicare & Medicaid Services ruled that applying a sales tax only to managed-care organizations dealing with Medicaid patients wasn’t allowed.

Earlier this year about $425,000 was cut from the county’s $43 million general fund budget due to the projected loss of the sales tax.

The Senate legislation on the additional funding is expected to be introduced later this month, Lohnes said.

“We’re waiting for the real numbers,” he said. “That’s our best guess at this point. We had to establish the fund before we receive the money.”


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By the numbers

$178 million: Clark County annual budget

7 percent: Amount of annual budget Clark County commissioners might cut

$3 million: Amount Clark County will lose annually after sales taxes on Medicaid organizations was eliminated

$6 million: Additional funding from the state Clark County might receive over the next two years

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