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Mount Vernon, Knox County, Ohio

By Cheryl Splain, KnoxPages.com Reporter

MOUNT VERNON — The county commissioners voted on Thursday to raise the county sales tax, but conflicting state laws leave Knox County in a bind.

The commissioners originally planned to impose the tax this month. When the Ohio House overrode Gov. John Kasich's veto of a provision to replace money counties lost when the federal government eliminated a sales tax on Medicaid managed care organizations, they decided to postpone the increase and see whether the Ohio Senate upheld the House veto.

“We were waiting to see what the Senate would do,” said Commissioner Teresa Bemiller. “Obviously, what's happened is they are going with the governor's proposal, so we are faced with losing that sales tax.”

The MCO sales tax brought about $500,000 into the county coffers annually. Knox County will receive a one-time allocation of $472,000 to help offset the loss: $121,000 in November and $351,000 in January or February 2018.

Since the Senate took no action, the commissioners said they felt they couldn't wait any longer to enact the sales tax. However, they discovered that they cannot raise the tax ½ percent as they intended.

Commissioners can raise the sales tax under two sections of the Ohio Revised Code; Knox County has .25 percent available under each section. Previously, taxes could be increased in increments of .25; the commissioners planned to combine the .25 percent available under each section and raise the tax by .50 (½) percent.

A new law that became effective last week changed that scenario. Now, taxes can only be raised in increments of .10. That means the commissioners can only raise the sales tax by .40, .20 from each ORC section. The remaining .05 under each section is unavailable to the commissioners and will sit there until the law is changed.

“State Rep. Rick Carfagna is aware and is working to get the law corrected, but even if it gets corrected, it won't be in time for us,” said Commissioner Thom Collier.

The .40 percent increase will generate around $2.5 million annually.

“That's a loss of $300,000 to $500,000 every year that we will not benefit from based on the original figures,” said Collier.

In a bizarre twist, the state can also still penalize Knox County because it is not taxing to capacity, even though state law prohibits the commissioners from imposing the full amount.

Adding to the financial crunch is the news that Knox County Job & Family Services, despite the children's services levy, will face a shortfall of $500,000 to $700,000 each of the next two years. Director Matthew Kurtz attributes the shortfall to the increase in children being cared for by children's services; the number has tripled over the last few years.

“The general fund has not been contributing to the children's services fund, but this [increase] is something we are aware of; it's happening in other counties, too,” said Bemiller. “That just outlines how much more we are having to put into the judicial side to take care of the opiod crisis. I think we are all alarmed with what we heard from children's services.”

“We weren't aware of this [shortfall] when we held our hearings,” said Collier. “Now it's a little more bleak than it was before.”

Effective Jan. 1, 2018, the county sales tax will be 7.15 percent. Of that, 5.75 percent goes to the state; of the county's 1.4 percent, 1 percent goes to 911 and .40 percent goes to the general fund. Bemiller said the county will start receiving money in March, but it the county won't feel the full impact until the end of 2018.

“Capital expenditures will be a high priority to make sure we can fund those,” she said. “We won't be floating in money by any means. The state made themselves whole on the Medicaid losses. Once again, we have to fend for ourselves. We are getting a clear message they do not want to revenue share with us.”

“I do not feel this administration realizes we are an arm of the state,” said Commissioner Roger Reed.

“None of us are thrilled with this [tax increase], but there's no other option. And it's worse to find out the changes in the law make it even worse,” said Collier. “We waited, hoping the Senate would follow the House's lead to get us closer to being made whole, but they never did.”

 

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