Lifting the burden of Medicaid

Counties benefit from new plans

State's new approach to medicaid expenses could put more money in county coffers

Thursday, Aug. 2, 2007

By Hannah Mitchell and Marcie Young
Charlotte Observer Staff Writers

County leaders in the Catawba Valley are pleased about a new state budget that removes a big part of their spending burden but say they haven't determined the full effect of the changes.
State lawmakers adopted the $20.7 billion budget this week, agreeing in it to gradually take on counties' Medicaid expenses.

Medicaid costs take a big bite of their income, and the expense has risen steeply in recent years. Counties in the region have pushed state lawmakers to either relieve them of the Medicaid burden or give them additional revenue sources.

The new state budget does both, though county leaders say the five-year process laid out in the spending plan is so confusing that they're still not certain how it will affect them.

The state will begin taking on the counties' share of Medicaid costs this year, taking the full load in 2009.

But over a five-year period, it will also:

Take away part of the counties' share of sales tax receipts.

Change the formula by which one other local sales tax is distributed. Some county leaders think that would generate more money, while others are unsure.

Take away part of counties' school capital money this year.

Allow counties to hold referendums either on an additional quarter-cent local sales tax or a .4 percent land-transfer tax.

The plan guarantees that each county would gain a minimum of $500,000 annually, before levying any additional voter-approved taxes.

"I think they made this so complicated that people have a tough time understanding it," said Catawba County Manager Tom Lundy.

Alexander County
The county's Medicaid expenses take an equivalent of 8 cents on its 53.5-cent property tax rate, said County Manager Rick French.

Removing that burden is "a very positive impact," he said. But, he added, "It's confusing. There are lots of pieces and parts to this puzzle."

State figures indicate that Alexander would have a $500,000 annual net gain from the legislature's plan.

French attended a meeting in Raleigh on Wednesday to get more information about the changes.
Burke County
With the new legislation, Burke would get $500,000 more this fiscal year, according to state figures, and by the end of the five-year change would gain nearly $1 million annually.

The county plans to put the money into its savings, said county Finance Administrator Paul Ijames.

"It certainly relieves the burden of having to pay Medicaid," Ijames said. "It's a little less than what we were looking for, but it's a start."

Burke budgeted about $5.3 million for Medicaid expenses this year, or about 8.7 cents on the county's 52-cent property tax rate.

Caldwell County
The county budgeted about $4.4 million for Medicaid expenses this year, said county Finance Administrator Sam Yearick. Medicaid expenses, he said, require about 10 cents on the county's 65.9-cent property tax rate.

The legislature's plan, according to state figures, would give Caldwell County a $500,000 net gain this year. By the end of the five-year change, it would gain nearly $1 million annually.

County manager Jack Horton said he has been talking to county officials this week about the new legislation and is not sure if the savings could lead to a lower property tax rate, which commissioners raised this year by 12 cents.

"It's good that the state has taken over Medicaid," he said, "but that doesn't mean we're going to be rolling in extra money this year."

Catawba County
Based on state figures, Catawba would gain $500,000 this fiscal year after all the state's giving and taking. By the end of the five-year change, it would gain $1.4 million annually, or the equivalent of a penny on its property tax rate.

County leaders want to know more about the plan, and they emphasized that although it sounds positive, they don't consider it a windfall.

"It looks like all five years will be positive for us," County Manager Tom Lundy said. "The question is how positive. This is all predicated on assumptions right now, and estimates."

This year, Catawba has a $7.5 million Medicaid budget, or the equivalent of five cents on its 53.5-cent property tax rate.

The savings could lead to a drop in the tax rate, which commissioners raised this year by 9 percent. Lundy said commissioners likely won't decide on that - or the referendum option - until next year, when the county more fully understands its new financial position.


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