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Valley lawmakers pen letter to governor: 'Cuts to revenue share are devastating'

Lawmakers voice concerns about June deadline for Medicaid tax fix
January 23, 2017
Democratic Newsroom

State Reps. John Boccieri (D-Poland), Michele Lepore-Hagan (D-Youngstown) and Glenn Holmes (D-McDonald) last week wrote a letter to Gov. John Kasich urging him to preserve the revenue local governments and public transit systems receive from the Medicaid Managed Care Organization (MCO) tax. The federal Centers for Medicare & Medicaid Services (CMS) have given Ohio a deadline of June 30, 2017 to remedy its MCO tax structure so that it complies with CMS policy, but any changes may threaten the millions of dollars local communities currently receive from the tax. 

“Our concerns need to be heard on this issue and I want to work with the governor to include a fix to the MCO tax revenue in the upcoming state budget,” said Boccieri. “If local revenue sharing isn’t preserved, the legislature will cripple our communities with another unbearable budget hit.” 

Ohio has been out of compliance with CMS healthcare tax policy since a 2014 letter from the federal government clarified that the MCO tax must be broad-based, uniform and hold no payer harmless from the impact of the tax. According to CMS, Ohio’s tax still does not meet the broad-based requirement because the fact that it is embedded into the larger sales tax base does not exempt it from the obligation to apply to non-Medicaid providers. Should Ohio fail to fix its formula by June, it risks losing critical state matching funds that serve as a fundamental revenue stream for local communities and transportation systems. 

“As a former mayor, I know that communities across Ohio depend on MCO tax revenue to keep their public transportation networks, local infrastructure projects and police and fire departments afloat,” said Holmes. “I’m looking forward to working with the governor and my colleagues in the legislature to find a replacement revenue stream, as further cutbacks to these vital services are unacceptable.” 

Other states previously in violation of this rule – such as Pennsylvania and California – have found CMS-approved solutions to the problem, including broadening the MCO tax base while lowering other taxes to offset the impact, and changing the scope of distribution for MCO tax funds while implementing new financing arrangements for matching funds. 

“Our community has already suffered from severe state budget cuts over the past few years and cannot afford to lose another round of millions in shared revenue,” said Lepore-Hagan. “I hope that governor will show leadership on this issue and offer a formula fix that preserves the valuable resources communities rely on to deliver services to their residents.” 

The full list of signatories on the letter to the governor were as follows: Reps. John Boccieri, Michele Lepore-Hagan, Glenn Holmes and Mike O’Brien, and Sens. Joe Schiavoni and Sean O’Brien.

Valley lawmakers pen letter to governor: 'Cuts to revenue share are devastating' (PDF)