$2.2 million burden will be eliminated
County's Medicaid payments will be eliminated in three installments
By Dwight Otwell Editor

"That should be a smile to the taxpayers' faces."

Cherokee County Commissioner Jonathan Dickey made that statement Monday at the county commission meeting. He was referring to a new state provision that will, in two years, take away the county's entire Medicaid burden, which is currently about $2.2 million.

County Manager David Badger said that when Governor Mike Easley signed the 2007 budget into law it provided for a three-year phaseout of county Medicaid expenses in exchange for a gradual assumption of a half-cent local sales tax.

Starting October 1 of this year, the state will take over 25 percent of the Medicaid burden that North Carolina counties must pay. On July 1, 2008, the state will take over 50 percent of what counties now pay. On July 1, 2009, the state will take over all of the counties' portions of Medicaid payments.

In exchange for the $2.2 million in Cherokee County contributions to Medicaid, the state will take some of the county's sales tax, Badger said.

According to the North Carolina Association of County Commissioners, 15 to 25 percent of the population in Cherokee and Clay Counties are eligible for Medicaid. Medicaid fraud is a problem in the area, according to social workers and law enforcement.

North Carolina is the only state left in the United States in which counties supply part of the cost of Medicaid payments.

The state, in the first year, will provide $86 million in Medicaid relief to counties with $19 million in additional state aid to guarantee that all counties receive at least $500,000 in benefits under the plan. To help offset some of the cost to the state, the General Assembly will withhold about 50 percent of the Public School Building Capital Fund for 2007-2008. Counties will make up the difference through their Medicaid savings and hold harmless payments.

When the state assumes 50 percent of Medicaid costs, counties and cities will forego 1/4 cent per capita of Article 44 sales tax beginning October 1, 2008. State sales taxes will be used to hold counties harmless if countywide sales taxes, including municipal hold harmless, exceed Medicaid savings. All counties, again, will be guaranteed at least $500,000.

On July 1, 2009, when the state assumes 100 percent of Medicaid costs, the counties and cities will forego all of Article 44 sales tax.

In addition, the state budget includes authority for counties to levy either a 0.4 percent land transfer tax or a quarter-cent sales tax, subject to voter referendum. There is no restriction on how the proceeds can be used. According to a North Carolina Association of County Commissioners estimate, the .4 percent land transfer tax would bring in $1,691,628 annually while the 1/4 cent point sales tax would bring in $845,047.

The earliest a referendum could be held would be May and a special election would cost $18,000 to $20,000, Badger said.

"The hold harmless measure means that every county will benefit by a minimum of a half million dollars every year," Badger said. "We are still accessing how much it will bring in."

Other county business conducted Monday includes the following:

• In the public forum, some citizens questioned the three commissioners about proposed liquor by the drink in restaurants, which has been discussed by the Murphy Board of Aldermen. Debbie Boros asked if a liquor referendum shouldn't be a county referendum instead of just a Town of Murphy referendum. County Attorney Scott Lindsay said the board can vote itself to have liquor by the drink or it can submit the question to the people for a vote as has been done twice in the Town of Murphy. The measure was defeated both times.

• Commissioner Dana Jones said if you put liquor by the drink or zoning on the ballot, both would be defeated by an 80 percent vote. "I am not for either one," he said.

• The board approved a resolution so that the Peachtree Volunteer Fire Department can build a new fire station building. The county has to approve a resolution supporting a loan for the building even though the fire district is responsible for paying it. The county guaranteed that the fire tax for the Peachtree district would remain the same during the time of the loan.

• Brenda Blount asked the commissioners again to help with cost of badly needed repairs to the Texana Community Center. Sheriff Keith Lovin suggested that they try to find a trailer, perhaps from the school system, to house an after school program. The center isn't heated properly and there is no air conditioning.

• The time for the next county commission meeting was changed from Monday, September 3 to Tuesday, September 4 at 8:30 a.m. because Monday is Labor Day.