Governor offers one-time mitigation of sales tax mandate

Butler County officials predicted the state government wouldn’t institute a permanent fix to a federal mandate that erased some sales tax collections and they were right, Gov. John Kasich has proposed a one-time only distribution of state funds to close the $200-plus million gap.

At budget time last year Finance Director Tawana Keels estimated a federal mandate would cut $3.1 million in sales tax.

The $3.1 million hole in the budget is due to the Centers for Medicare & Medicaid Services ruling Ohio has unlawfully collected sales taxes on Medicaid matching monies on transit systems. That sales tax disappears in July.

MORE: Butler County losing $3 million in sales tax collection

Keels said previously the county can count on receiving about three-quarter’s of the Medicaid tax this year, or $2.4 million.

Kasich’s executive budget includes $207 million for 2018 in a new fund called the “Medicaid Local Sales Tax Transition Fund.”

Commissioner T.C. Rogers said he’ll be interested to see what other local funding might be going away to finance this one-time bailout.

“Here in Butler County that’s what we thought that’s what it was going to be anyway,” Rogers said. “If there was money to pay for that we figured we would lose it in other areas because a dollar is a dollar. What’s happening is what we anticipated, it’s just we didn’t know in the final analysis whether they would wind it down over a two year program.””

The state, especially during the recession cut local government funding pretty drastically, but the distribution list in the governor’s budget shows $380 million for this year, a $1.8 million increase for 2018 and there is a recommendation for an $11.7 million increase for 2019.

The governor’s budget document offers 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.

Office of Budget and Management Director Tim Keen said the county-by-county distributions — which will be released soon — will depend on how much a county relied on the revenue source and their capacity to absorb the loss. There is also about $50 million — of the $207 million budgeted for next year — to compensate counties this year after the tax expires.

Cheryl Subler, managing director for policy for the County Commissioners Association of Ohio said the Medicaid sales tax collections for the counties and transit authorities for 2016 totalled $209 million statewide. Subler said the association’s initial reaction to the governor’s budget recommendation was that it is not adequate.

“It doesn’t fully address the hole that is left by this change in tax policy,” she said. “We are anxious to learn more about the governor’s proposal.”

Even with budget hole the county was able to pass a structurally balanced, $95.9 million general fund budget for this year. The county was anticipating a jump of $2.3 million — or 5.4 percent — in sales taxes this year, but Keels trimmed that back to about $41.5 million overall.

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