Madison County commissioners have decided to increase the real-estate conveyance fee charged on every transfer of property to help off-set a cut in state tax funding.
Currently, county residents pay $2 for every $1,000 of transaction. That fee will increase to $3 per $1,000 of transaction. If the 2018 fiscal year still looks uncertain, commissioners will look into increasing the fee to $4, said Commissioner David Dhume.
The increase will raise about $120,000 annually, depending on the number of transactions.
The board approved the increase Monday following the recommendation of the budget commission. Two public hearings are required before any fee increase can take effect. After the second hearing, 30 more days must pass before property transfers are charged at the higher rate.
The fee is typically assessed as part of the seller’s closing costs though, like other closing costs, it can be negotiated that the buyer pays.
Dhume said the county has not raised conveyance fees in more than 20 years. Commissioners don’t take the decision lightly, he added.
The fee jump is being put in place in response to the state’s proposed sales tax cut included in Gov. John Kasich’s new two-year budget. The move will cut $250,000 from Madison County in 2017 and another $250,000 in 2018.
Kasich is axing a sales tax to Medicaid managed care organizations, independent contractors that provide benefits for recipients of federal healthcare. Those taxes are collected by county governments.
The cut was mandated by the federal government, who said that Ohio couldn’t just tax Medicaid managed care providers, but needed to either tax all kinds of managed care organizations or instate a different kind of tax.
The state is offering some relief to cover up the remaining half for 2017, but after that county governments will have to figure out how to cover the rest of the lost revenue.
Madison County isn’t being hit as hard as other counties who have many healthcare organizations within their sales taxed districts. Here, the tax makes up 7.76 percent of the county’s total sales taxes, according to the County Commissioners Association of Ohio.
The county’s other option is an increase to the county’s general 7.25 sales tax. The county can go up to 7.5 percent.
Although that can be “tempting” — especially given increasing jail costs — Dhume said this was unlikely. Commissioners would save that option in case of an extreme fiscal emergency.
The sales tax cuts only compound other cuts in local government funding, Dhume said.
He emphasized the conveyance fee increase will “in no way shape or form offset the sales tax, but it does get us about a third of the way there. Which will be quite helpful.”
He emphasized the county is “fine” financially.
“Our estimated revenue for this year was far above the budget we made,” he said. “This is a matter of trying to make up for lost money.”
Maximilian Kwiatkowski can be reached at 740-852-1616, ext. 1617 or on Twitter @MSFKwiat.