Ohio counties brace for state cuts

CHILLICOTHE – As Ohio counties look to finalize 2017 budgets, they are preparing for state cuts that could potentially be anywhere from 2 percent to 25 percent of their state sales tax allocations.

Counties and transit authorities will be cut due to a federal decision that restricts states from applying sales tax to managed care organizations. The change means a projected loss of $558 million in fiscal year 2018, which begins July 1, 2017, and $578 million in fiscal year 2019. Of that, about $200 million each year would have been directed to county and transit authority coffers.

Ross County could lose upwards of $1.6 million, the amount it received from the managed care sales tax in 2015. The amount represents 10.1 percent of the state sales tax distributed to the county that year.

In Pike County, the hit could be up to $760,127, which was 16.3 percent of its overall sales tax allocation in 2015.

Officials are “looking at several different solutions to offset that impact,” said John Charlton, spokesman for the Office of Budget and Management. Whatever is settled on will be part of the governor’s budget proposal, which will be released Jan. 31.

“One of the solutions may be that counties that are more reliant will get more help,” Charlton said.

The managed care sales tax allocations were primarily based on the number of people on Medicaid in a county. Vinton County topped the list in 2015 when the $352,210 it received in 2015 was a fourth of its state sales tax funding while Delaware County’s $909,505 was about 2 percent of its overall allocation.

Whatever the cut, it will impact the second half of the county’s 2017 budget they are trying to finalize now.

Ross County Auditor Tom Spetnagel isn’t too concerned about the 2017 budget, saying he expects they can handle whatever the cut will be since it wouldn’t kick in until September. Strong motor vehicle sales have continued to boost local sales tax collections, which currently are 6 percent higher year-to-year with one month left to go, Spetnagel said.

However, the county’s 2018 budget would be a different story since it will feel the full impact of the cut. The amount of the cut and the health of local sales taxes in 2017 will determine exactly what the county will need to do. Right now Spetnagel thinks the main impact would be a need to finance all the costs for the jail expansion project instead of a small portion.

“They’ve not made any promises to make anyone whole, but they want to do something to help ... We’re going to prepare for the worst, hope for the best,” Spetnagel said.

Even so, Spetnagel and the commissioners are planning to keep general fund allocations and spending tight for 2017 in anticipation. The commissioners have been urging county officials during budget meetings to reach out to their respective associations to put pressure on legislators to replace the funds in the budget.

Counties aren’t the only ones with concerns, though. State agencies will have to absorb the remaining $300 million of the managed care sales tax loss. The hit is one Charlton expects the state to be able to weather without touching the oft mentioned $2 billion rainy day fund, which is set aside to stabilize the budget when there is a crisis.