Butler County recoups some sales tax loss

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Butler County recoups some sales tax loss

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The Government Services Center in Hamilton, Friday, Aug. 7, 2015. GREG LYNCH / STAFF

Butler County is slated to receive $2.1 million in one-time transitional money to make up for Medicaid sales tax the federal government recently erased as a revenue stream.

The state’s Office of Budget and Management released the list of counties and transit authorities that will receive the one-time funds, and Butler County’s share is about a $1 million less than it was receiving in the revenue.

Gov. John Kasich’s executive budget — which was released a week ago — includes $207 million for three months of this year and all of 2018 in a new fund called the “Medicaid Local Sales Tax Transition Fund.”

The governor’s budget document offered this by way of explanation:

“One-time appropriation in fiscal year 2018 is used to mitigate the effects of and assist in the adjustment to the reduced sales tax revenue of counties and affected transit authorities,” the budget document reads.

Butler County Finance Director Tawana Keels told the Journal-News during budget time last year they are expecting a $3.1 million budget hole because the federal government ruled Ohio and its counties were impermissibly collecting the tax on Medicaid managed care services.

When the county first learned about the situation they said they had been told the state was working on a solution to the huge revenue reduction — the total loss to counties statewide was estimated at $145 million — it appears from the budget statement the solution is counties have to get used to lower funding.

Keels said they were expecting a gradual phase out of the revenue from the state, instead they got a “hard stop” in July of this year and only a 70 percent reimbursement. She said they are lucky they budget revenues very conservatively and when the $2.1 million check comes in October, they will put it in a separate fund — as instructed by the state — and it will only be used for one-time not ongoing expenditures.

“Based on history your instincts say they are not going to replace it dollar-for-dollar, history doesn’t show that they really do that…,” Keels said. “We were warned by the state that this would happen, we were lead to believe that there would be a fix for the hole in our county budgets but we knew intuitively, based on history, that the probability we would receive 100 percent replacement funding was very low.”

Office of Budget and Management Director Tim Keen said they distributed the funds based on a county’s need and reliance on that revenue stream. Of the 88 counties in the state eight, including neighboring Warren County, will get nothing. Keen also addressed why the payment is one-time only.

“They’ve only had this since 2010, why am I going to permanently replace something they’ve only had for six years,” Keen said.

Commissioners Don Dixon and T.C. Rogers said it doesn’t surprise them that funding is being cut once again from governments higher up on the food chain because it has happened before. Rogers said this is just another example of an unfunded mandate.

“When a lot of these things pass they do become unfunded mandates, because they only have them for three or four years and nobody talks about what happens after that,” he said. “It’s a way the feds push their expenses through the state to the locals.”

Even with the “hole” in the county’s budget the commissioners approved a structurally balanced $95.9 million general fund budget for this year, which means they won’t dip into reserves to balance the spending plan. The county has committed to completely erasing the general fund debt by 2020 and they have been beefing up fund balances and saved for contingencies like this one.

“We have got a a budget plan that anticipates some of that stuff. Did we anticipate this? No we didn’t,” Dixon said. “But we also now have a contingency fund that I believe has $6 million in it already, so it was designed to do things like this. This is not going to stop here. They (the state and federal governments) are going to continue to take it from the bottom and take it to the top and put it in their budgets, and pretend local governments can get by, in the long haul they won’t be able to.”

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