07/29/07 — Area leaders react to plan for Medicaid

View Archive

Area leaders react to plan for Medicaid

By Matthew Whittle
Published in News on July 29, 2007 2:01 AM

After years of watching their budgets buckle under the weight of ever-increasing Medicaid costs, Wayne County officials were holding their breath as they waited for the state General Assembly to give final approval to a budget agreement that would begin a three-year phase out of the counties' share of the cost.

Now that the legislature has passed the measure, county leaders are still holding their breath -- to make sure the bill survives the next steps.

"It's going to help quite a bit. That's going to give us an opportunity to look at some other things on our plates," county Commission Chairman John Bell said before the measure earned the 'yes' votes Saturday.

This year, Wayne's Medicaid bill is estimated to be about $8.4 million.

Under the proposal, the state would take back a portion of the 2.5 cents ($20.5 million) in sales tax appropriated to the counties in exchange for the Medicaid relief. In addition, the counties will likely be allowed to levy either a quarter-cent sales tax or a 0.4 percent land transfer tax, subject to a voter referendum.

Details of how exactly the state will assume the counties' costs and how much sales tax will be withheld, though, were still unclear.

"I think it's going to be good for the counties and good for the state," said Sen. John Kerr, D-Wayne. "We're going to let the counties have the mechanism to carry out their responsibilities for school, community colleges, etc., without having to come up to Raleigh to beg for it."

But some commissioners said that it's not their ideal plan.

"It's good they've agreed to accept it," Commissioner Atlas Price said. "The state taking Medicaid back is good, but I'm still cautious about what they're doing to take it back.

"It sounds to me like we're still going to be paying the Medicaid bill regardless of how you cut it."

His concern is that with the state taking back a portion of the counties' tax revenues in exchange for Medicaid relief, the net result will be a wash -- at least in the short term.

In the long term, though, the commissioners acknowledged that Medicaid costs are likely to far outstrip what income they would have gotten from the sales tax. Rep. Larry Bell, D-Sampson, also noted that the budget will likely include provisions to hold counties and cities harmless so they at least break even.

"Nobody will lose anything. That's what I was told before," he said.

Still, to see enough savings or revenue increase to help pay for projects like the school facilities plan, county commissioners expect that some sort of tax increase -- whether property or more likely the sales -- will still be necessary.

The commission is not expected to utilize a land transfer tax option.

"The land transfer tax will not give us that much money -- not like Charlotte, Wake County and others," Commissioner Andy Anderson said.

To him and others on the board, the sales tax is the more attractive option.

If approved, the quarter-cent increase would raise the sales tax in Wayne County to 7 percent as the legislature appears to be in agreement about making permanent the rest of temporary increase approved in 2001. The extra quarter cent would likely bring in approximately $2 million.

"I think the people of this county would probably prefer that. With sales tax, everybody's paying a portion of it," Anderson said.

Either way, though, county finance director Pam Holt explained that the effects of the reform will not be felt in the budget until next year.

"This year it will have no effect. We won't lower property taxes. Nothing will happen in the budget we just approved," she said. "Depending on what they do, it likely would be factored in next year. That would be my guess."

Medicaid reform and the rest of the budget, Kerr said, are hopefully among the last big battles of the session.

The budget also includes the elimination of a 0.25 percent increase in the top wage-earners income tax, as well as an earned income tax credit.

Kerr also said he was pleased to see $100 million included in the $20 billion spending plan for water and sewer infrastructure.

"It's a big budget. Everybody's trying to make a true effort at getting this thing out," he said.