RTA bus Marvin Fong.JPG

(Photo: Marvin Fong/The Plain Dealer)

CLEVELAND, Ohio -- The already financially-strapped Greater Cleveland Regional Transit Authority stands to lose as much as $18 million annually in sales tax revenue starting in July 2017.

The loss comes as an expected change in state sales and use tax revenue - RTA's primary funding source - goes into effect. At that time, the state of Ohio will lose the sales and use tax revenue it is collecting from Medicaid managed care organizations. Mike Daugherty, manager of budgets for RTA, characterized the change as a "significant, catastrophic loss of revenue on an annual basis for the authority."

"It would be a catastrophic loss for every county and every transit agency in the state," Daughtery said Tuesday during an RTA board meeting.

Ohio projects that it will lose $558 million in state fiscal year 2018, which starts in July 2017, and $578 million in fiscal year 2019. The counties will see a $195 million loss in revenue in fiscal year 2018 and $202 million in fiscal year 2019.

"Hopefully, there has been some fiscally conservative budgeting going on," said John Charlton, director of communications for the Ohio Office of Budget and Management.

Ohio first was notified in July 2014 that its tax on Medicaid managed care organizations like CareSource and Buckeye Health Plan was at odds with federal regulations and was given until the end of its next regular legislative session - June 30, 2017 - to alter its taxing structure.

"At this point, we don't have a solution," said Charlton, who noted that it was too early in the process to discuss how the state will make up the revenue loss.

The impact will be felt especially hard in Cuyahoga County where RTA has had to raise rates and cut service to account for its lack of state funding.

"All of the actions that the board took in recent months really helped out, but we do have some challenges coming up for the 2017 budget year," Daugherty said. "I know this is not a pretty picture I'm painting."

With the loss of sales and use tax revenue, RTA will face a budget deficit of about $11.7 million in 2018 and $21.4 million in 2019. The authority is expected to take action on its 2017 tax budget at its July 26 board meeting.