Tuesday, August 9, 2016

2ND QUARTERLY ACCOUNTING ON STARK COUNTY BUDGET


STARK COUNTY TO LOSE UPWARDS OF
$2 MILLION ANNUALLY 
IN 
"JUSTICE SYSTEM SALES TAX"
 REVENUE
BEGINNING IN JULY, 2017


On April 26th,  (LINKThe Stark County Political Report provided Stark County taxpayers with a copy of data put out in report form by the Stark County commissioners on the "current" financial health of our county.

In November, 2010 Stark Countians made a wise choice in electing Democrat Thomas Bernabei (now "independent" mayor of Canton) and Republican Janet Creighton to commissioner positions.

The county was in the midst of a public confidence crisis as a consequence of upwards of $3 million having been stolen by then former chief deputy treasurer Vince Frustaci.  Frustaci pled guilty to federal charges and is currently serving a 10 year sentence in federal prison.

The SCPR credits Bernabei and Creighton with shaving right the Ship of State/Stark County to the point that county taxpayers were willing in November, 2011 to pass a 1/2 cent sales tax increase by a comfortable margin.

That sales tax will come up for renewal in 2019.

As part of the commissioners' continuing commitment to instilling public confidence in how they and other county officials (many of whom are elected independent of direct control by the commissioners) spend your tax dollars, they had the wisdom to hire one Chris Nichols (also a Canton Township trustee) to be the county's budget director.

Nichols has done superlative job of gathering and publishing county revenue and expenditure data for the edification of county officeholders, employees and most importantly in a highly understandable format Stark County taxpayers.

All Stark Countians have an obligation in our role as responsible citizens to understand government finances.

Here is a video (i.e. 60 slides which takes about 10 minutes to view) of Nichols'  March, 2016 budget presentation that ALL Stark Countians should take the time to view.

The presentation last seven minutes if not paused.

Yours truly encourages to hit the pause button for those slides that catch a viewer's eye.


Here is the slide presentation.



And here is a seven slide presentation on the 1st 2016 Quarterly Report.



And finally, here is the seven slide presentation for the current (2nd 2016 Quarterly Report).



Now to the expected as of July 1, 2017 nearly $2 million annual loss in revenue to the county treasurer.

Let's have Nichols explain it by sharing the following Nichols e-mail to the SCPR, to wit:

Chris B. Nichols <cbnichols@starkcountyohio.gov>  Today [Tuesday, August 9] at 11:10 AM
To:  Martin Olson

Good morning, Martin.

Starting July 1, 2017, due to a Federal Mandate, a Sales Tax Exemption will apply to Medicaid MCO’s (Managed Care Organizations).

I have attached an information document provided by the CCAO (County Commissioners Association of Ohio) and also a document prepared by the Ohio Department of Taxation, which calculates the expected impact on County and Transit Authority Sales Taxes.

In short, Ohio counties can expect to lose about $148,000,000 in annual Sales Tax Revenues.  

Regional Transit Authorities (including SARTA), which have Sales Taxes can expect to lose $33,576,000 in annual revenues.

In Stark County, we should expect  to lose $1,875,577 in annual Justice System Sales Tax (JSST) Revenue.  

This represents a 6.5% reduction in JSST revenue, per year.  When looking at our combined General Fund and JSST appropriations, it represents a 3% reduction in our total annual revenues, which are available for appropriation. (emphasis added by SCPR)

SARTA will lose the same 6.5%, but since their Sales Tax is only 0.25%, their dollar impact is expected to be $937,788 annually.  I’m not sure what % of their total revenue that represents.
Stark County also has the potential to feel a couple of other impacts from this change.

 The State of Ohio’s Sales Tax revenues will be impacted by about $550,000,000 per year, due to this change.  That revenue reduction to the State could impact us in the following ways:

1.    State Sales Taxes are part of Ohio’s General Revenue Fund, which is what the Local Government Fund formula is applied against.  A reduction in State Revenues will also mean a reduction in Local Government Fund revenue to Stark County and other political subdivisions.  I would expect this impact to be much less than the direct impact of the Sales Tax.

2.    With that big of a reduction in State Revenue for the next two-year budget cycle (about $1.1B), further cuts in the Local Government Fund could be put on the table, to help backfill that revenue loss to the State.  This will bear watching during the next State Budget Cycle, in addition to active communication with our local Legislators to protect Ohio’s political subdivisions from further cuts to the Local Government Fund.

As you will read, the CCAO is making it a Legislative Priority for the State to find a solution to replace this revenue.  But, as of now, we have to work on the assumption that the revenue lose will happen with no replacement.

We are fortunate that the County is currently in a solid financial position, so we are in a place to work through this revenue loss, but it will certainly impact our budget and operations in the coming years. 

These types of “surprises” are why in my budgeting and forecasts, I try to maintain conservative assumptions in both revenue and expenses.  

This significant revenue cut also shows why it is prudent for the County to maintain a reasonable carry-over balance, so that when things like this happen, we do not need to make sudden or drastic changes, but can work through them strategically and methodically.

If you have any questions or need anything else, please let me know.

Chris

There you have it folks, the latest on Stark County finances.

Stark Countians should be enormously impressed with the accountability that the commissioners have directed Nichols to provide to each and every one of us.

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