DALLAS -- The Ohio House of Representatives overrode a veto of an amendment to the 2018-2019 state budget, a move that would allow local governments and regional transit authorities to raise $207 million annually over the next six years.

The override of Gov. John Kasich's veto on franchise fees for health insuring corporations was one of several budget vetoes the state House of Representatives overturned Thursday.

However, lawmakers did not bring forward a vote to override Kasich's veto of a provision that would have ended enrollment to the state’s extended Medicaid plan.

John Kasich, governor of Ohio and 2016 Republican presidential candidate, speaks during a town hall event in  Brooklyn on April 7, 2016. Kasich is a leading critic of the Senate Republicans' health care plan.
John Kasich, governor of Ohio and 2016 Republican presidential candidate, speaks during a town hall event in Brooklyn on April 7, 2016. Kasich is a leading critic of the Senate Republicans' health care plan. Bloomberg

The House voted 87-10 to override Kasich’s veto of the managed-care tax replacement amendment.

The amendment requires the state to seek federal approval from the Centers for Medicare and Medicaid Services to reset the franchise fee on health insuring corporations that would raise up to an additional $207 million per year, for six years.

The revenue, if the Senate joins the override, would go to counties and regional transit authorities to replace the loss of sales tax revenue from the axed sales tax on managed-care organizations doing business with Medicaid because it was in violation of federal rules.

Kasich on Friday vetoed the amendment because he was concerned that the change in fees could jeopardize the new waiver for the franchise fee on all managed-care companies that had already been approved.

Kasich also noted in his veto statement that the executive budget “already provided transition payments for the counties as they adjust their budgets in preparation for the end of the existing tax. Therefore, this veto is in the public interest.”

Kasich’s two-year executive budget fully replaces lost revenue to the state through a new proposed franchise fee on managed care organization, but only provided counties and transit authorities a one-time allocation to be spread out over two payments.

Cuyahoga County and the Greater Cleveland Regional Transit Authority stood to lose about 7% of their annual revenue stream, $30 million and $18 million, respectively.

Joseph Calabrese, CEO and General Manager of the Greater Cleveland RTA, said in testimony before the Ohio Senate Finance Committee on June 15 that the loss would be devastating to the economy of Northeast Ohio.

On Medicaid, House Speaker Cliff Rosenberger, R-Clarksville, said his chamber will wait and see how the health care debate played out at the federal level before acting on the state level. He said the House still has until the end of Ohio's two-year legislative session in December 2018 to act.

“At this juncture, we want to give the federal government the summer to see if they're going to come to a conclusion in Congress before we take action on moving forward with the freeze waiver and the request," Rosenberger said.

In his veto statement, Kasich said the enrollment freeze violates federal law prohibiting states from “denying coverage to members of an otherwise eligible group.

"We just don't think it's the right way to proceed," Kasich said.

Kasich said the expansion would bring into the state nearly $300 million Medicaid dollars for opiates that would be used on top of the $170 million allocated in the state’s budget.

The vetoed legislation is part of the $133 billion 2018-2019 budget signed by the Kasich on Friday. The Senate is scheduled to be in session on July 12 where it is expected to address Kasich’s vetoes.

Ohio is rated AA-plus by S&P and Fitch Ratings. Moody’s Investors Service rates the state Aa1.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.